Sister and Brother Team Kristin Rial & Steve Rial - Edina Realty

Kristin Rial and Steve Rial, Serving The Twin Cities Metropolitan Area

Calculate Your Fianancial Health

My Debt To Income Ratio

Your debt to income ration can be an important piece of information when buying a house. Lenders use this number in part to determine your ability to pay the mortgage you are applying for. For your personal edification you can use this to indicate your financial health.

The typical American household will have the following debt obligations:

  • home mortgage
  • second mortgage or home equity loan
  • auto loan(s)
  • student loans(s)
  • 4-5 credit cards
  • retail financing loan
  • other

Basically, the more income you make, the more debt you can assume. The ratio of your debt-to-income is a percentage of debt that presumably you can safely assume at your current income level.

The "Debt-to-Income" Ratio
The ratio is calculated by dividing your fixed monthly debt expenses by your gross monthly income.

As a basic rule, you should live within the following percentages:

  • monthly housing debt expenses including taxes, insurance: 25-28%
  • other credit obligations (credit cards, auto loans, etc.): 10-15%
  • your total debt obligations should be no more: 36-40%
Use this simple calculator to calculate the monthly total from an annual total.
Total for the year divided by 12 = Amount per month 
/ 12

Input the following information to calculate your Debt-to-Income Ratio:

Monthly Debt Payments
Auto or Other Installment Loan Payments:
Monthly Credit Card Minimum Payments:
  Credit Card #1
  Credit Card #2
  Credit Card #3
  Credit Card #4
  Credit Card #5
  Credit Card #6
Credit Line Payments (home equity):
Credit Line Payments (unsecured):
Other Real Estate Loan Payments (ones that do not produce income i.e. cabin):
Taxes and Legal Assessments:
 
Monthly Income
Monthly Gross Salary or Pay:
Annual Bonus (divide this by 12 to get the monthly amount):
Other Monthly Income:

Total Monthly Debt Payments:
Total Monthly Gross Income:
Debt-to-Income Ratio (should be around 36%):

Debt Ratio Interpretation:

  • 36% or less:
    debt level within acceptable range for most people.
  • 37%-42%:
    debt level a little high, need to take corrective action to bring debt level down. You may consider paying off or consolidating some of your debt.
  • 43%-50%:
    danger level, need to take immediate action before you lose control of your financial situation.
  • 50% or more:
    excessive debt loan, may need to seek credit counseling services.

* Calculations are based upon the assumptions you entered. Please note that rounding errors can make a small difference in calculations. Your actual mortgage lending rate may vary depending on your credit quality and lender. The circumstances surrounding your credit and loan qualifications may result in different calculations.

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