Calculating your Debt-to-Income Ratio

Your debt-to-income ratio shows when debt is getting out of control

One of the fundamentals of good financial health is knowing where you stand and keeping your debt at a manageable level. One of the best measures of manageable debt is your debt-to-income (DTI) ratio, and this section will provide you with the steps to calculate your DTI.

If your calculations reveal that you are carrying too much debt, we can help you find the right debt solution. Call Consolidated Credit today at for a free debt evaluation with a trained credit counsellor, or take the first step online now by completing a Free Debt Analysis.

What does debt-to-income ratio mean?

Your debt-to-income (DTI) ratio is exactly what it sounds like – the total amount of debt you have, compared to your total income. This is calculated on a monthly basis, that is, monthly income versus the amount you pay each month in debt expenses. It’s an easy and effective way to see if your debt level is healthy.

High debt levels can lead to a lot of problems, and the slightest income interruption or unexpected expense could cause a downward spiral into stress and hardship. Calculating your DTI on a regular basis will help you detect early warning signs and will help keep you on track any time you plan to make a big purchase.

Debt-to-income ratio calculator

Calculating your DTI ratio is easy when you have the right tools. Consolidated Credit is here to help. Have your budget ready, and enter the required information. Our calculator will tell you if you need to develop a debt-reducing strategy to stay afloat.

Click here to use the DTI ratio calculator.

Using your DTI ratio to determine if you need help

After calculating your debt-to-income ratio, compare yourself to the ratios below and see what action you may need to take:

The ideal ratio – 36% or less

Financial experts agree that a consumer with a 36% DTI ratio is in an ideal situation. A ratio this low should leave you with a cash flow that is able to cover all of the regular expenses in your budget. It should also allow you to save the recommended 10% of your take-home income. And finally, a low DTI will make you look very attractive to creditors and will likely result in better interest rates.

The critical ratio – 50% or more

Having a debt-to-income ratio of more than 50% means you have too much debt and you are likely struggling to meet your monthly financial obligations. Creditors may see you as a risk. You need to re-evaluate your budget and make sure you stick to it, cutting down on discretionary spending and focusing on reducing your debts. If you aren’t able to free up enough cash, you might want to consider seeking a helping hand.

Call Consolidated Credit today at to speak with a trained credit counsellor for free, or get started online with a request for a Free Debt Analysis.

Somewhere in between

If you fall between the ideal and critical ends on the DTI spectrum, you should try to make moves to ensure you stay out of financial peril. Extra cash should go toward paying down debts. Monitor your credit score and make sure you stay well below the limits on your credit cards. Be proactive and consider a debt management program before things get out of hand.

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With this amount of debt, you'd pay around $xx.xx on a DMP.

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