Debt-to-Income (DTI) Ratio Calculator
The share of monthly income going on debt repayments, how lenders read it, and how much you would need to cut to reach a comfortable level.
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- Formula and worked example included
Debt-to-Income Ratio Calculator
Enter your figures to see results.
What is a debt-to-income ratio, and is mine too high?
Your debt-to-income ratio is the share of your gross monthly income that goes on debt repayments: loans, car finance, credit-card minimums, buy-now-pay-later. Under 20% is comfortable, 20–35% is normal, above 36% will start to limit what lenders offer, and 50% or more leaves no room for a shock.
How to use this calculator
- Add up your monthly debt repayments: the minimums on cards, plus loans and finance.
- Enter your gross monthly income before tax.
- Read the ratio against the lender bands, and see how much you would need to cut to reach a comfortable level.
What your result means
How to read the figure, what counts as normal, and what to do about it.
What the ratio measures
The debt-to-income ratio shows what proportion of your income is already committed to repaying borrowing before you pay for anything else. It is one of the first things a lender calculates, and it is a useful discipline for anyone, whether an owner-manager looking at their own finances, or a director assessing whether the company can take on another facility.
For a business the same idea appears as the debt service coverage ratio: operating cash flow divided by total debt repayments. Lenders typically want at least 1.25, meaning £1.25 of cash generated for every £1 of repayments.
How lenders read the figure
| DTI | Interpretation |
|---|---|
| Under 20% | Low. Plenty of capacity; unlikely to be a factor in a decision. |
| 20–35% | Moderate. Normal for someone with a car loan and a credit card; acceptable to most lenders. |
| 36–49% | High. Expect stricter affordability checks, higher rates or lower loan amounts. |
| 50% and above | Very high. New borrowing is likely to be declined; the budget has no resilience to a shock. |
UK mortgage lenders do not usually publish a DTI limit; they use loan-to-income caps (typically 4.5× income) and detailed affordability models that stress-test payments against rate rises. Consumer lenders and the credit-reference agencies pay closer attention to the DTI-style figure.
Bringing the ratio down
There are only two levers: less debt or more income. On the debt side, consolidating expensive credit-card balances into a lower-rate loan reduces monthly payments (though not the total owed), and clearing the smallest balance first frees a payment quickly. Avoid extending terms simply to shrink the monthly figure: it lowers DTI but raises the interest paid. For a business, refinancing several short facilities into one longer-term loan often improves coverage ratios enough to qualify for cheaper borrowing.
Worked example: a director checking personal affordability
A company director takes £4,200 a month gross in salary and dividends. She pays £380 on car finance, £620 on a personal loan, £250 in credit-card minimums and £200 on a buy-now-pay-later plan: £1,450 in total.
DTI = 1,450 ÷ 4,200 = 34.5%, the upper end of moderate. To bring it to 30% she needs monthly repayments of £1,260, a cut of £190. Clearing the BNPL balance alone would do it.
Frequently asked questions
Should I include my mortgage?
It depends what you want to know. The standard consumer DTI excludes housing; the total-debt version includes it. If you are assessing capacity to borrow more, include it, because the lender will.
What DTI do I need for a mortgage?
UK lenders rarely quote one. They cap loans at around 4.5 times income and run an affordability check on your committed outgoings, of which debt repayments are a major part. Keeping non-mortgage debt under 20% of income makes those checks much easier to pass.
Does DTI affect my credit score?
Not directly, because UK credit files do not record income. But high utilisation of your credit limits, which usually accompanies a high DTI, does lower your score.
How is business debt assessed differently?
Lenders look at debt service coverage (cash flow versus repayments), leverage (debt versus EBITDA) and security. A personal guarantee from a director brings the director's own DTI into the assessment too.
The maths behind this calculator
For anyone who wants to check the working or rebuild it in a spreadsheet.
The formula
DTI (%) = Total monthly debt repayments ÷ Gross monthly income × 100 Debt service coverage (business) = Net operating income ÷ Annual debt repayments
Assumptions and limits
- Income is gross (before tax). Some lenders use net income, which gives a higher ratio; be consistent when comparing.
- Housing costs are excluded from the default definition. Include your mortgage or rent if you want the "front-end plus back-end" ratio that some lenders use.
- Credit-card payments should be the minimum required, not what you choose to pay.
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