Debt-to-Income Ratio: 3 Easy Steps to Calculate Yours

Your debt-to-income ratio is the share of your gross monthly income that already goes on debt repayments. Lenders use it to judge whether you can take on another payment, and it often matters as much as a credit score when applying for a mortgage. It takes a few minutes to calculate and is worth knowing before you apply for anything.

Updated September 2026. General information, not financial advice. The specific limits below are US mortgage rules; lenders in other countries and for other products set their own.

What the debt-to-income ratio measures

The US Consumer Financial Protection Bureau defines it as all your monthly debt payments divided by your gross monthly income, where gross means income before tax and other deductions. The result is shown as a percentage. A lower figure means more of your income is free after existing commitments, which lenders read as more room to absorb a new payment.

It is a snapshot of cash flow rather than wealth. Someone with large savings but heavy monthly repayments can have a high ratio, and someone with little in the bank but few debts can have a low one.

How to calculate your debt-to-income ratio in 3 steps

1. Add up your monthly debt payments. Include rent or the mortgage payment you are applying for, car loans, student loans, the minimum payment on each credit card, personal loans and any court-ordered payments. Use the required monthly amount, not what you choose to pay.
2. Work out your gross monthly income. Take pay before tax. If you are paid annually, divide by 12. Lenders generally count income that is stable and documented, so irregular extras may not be included.
3. Divide and multiply by 100. Debt payments divided by gross income, times 100, gives the percentage.

A worked example

The CFPB uses a household with a 1,500 mortgage payment, a 100 car loan and 400 of other debts, 2,000 in total, against 6,000 gross monthly income. That gives a ratio of 33 percent.

A second illustrative case: a proposed housing payment of 1,400, a car loan of 350, a student loan of 150 and credit card minimums of 100 total 2,000 a month. With gross income of 6,500, the calculation is 2,000 divided by 6,500, which is 30.8 percent.

If you are not sure what the housing payment on a new loan would be, our loan repayment calculator gives the monthly figure for any amount, rate and term, which you can then drop into step 1.

What usually counts, and what does not

• Counted: mortgage or rent payments, instalment loans, minimum credit card payments, and other recurring obligations that appear on a credit report or in the loan file.
• Usually not counted: everyday living costs such as food, utilities, phone bills, insurance you pay separately and transport. These matter to your budget but are not debts.
• Depends on the lender: loans with only a few payments left, and debts someone else is paying. Mortgage guides set detailed rules for these.

US mortgage debt-to-income ratio limits in 2026

Most US mortgages are sold to Fannie Mae or Freddie Mac, so their rules shape what lenders accept. As checked in September 2026:

• Fannie Mae, manually underwritten loans: section B3-6-02 of its Selling Guide, dated 2 April 2025, sets a maximum total ratio of 36 percent of stable monthly income. That can rise to 45 percent where the borrower meets the credit score and cash reserve requirements in the guide.
• Fannie Mae, Desktop Underwriter loans: the same section sets a maximum of 50 percent for loans assessed through its automated system.
• Freddie Mac, manually underwritten loans: its fixed-rate mortgage product page states a maximum ratio of 45 percent.

Two points put these numbers in context. First, they are ceilings, not targets: Fannie Mae notes that lenders may apply stricter limits of their own. Second, the ratio is weighed alongside credit history, deposit and reserves, so meeting the limit does not by itself mean approval.

To see what those limits mean in money, take gross income of 6,500 a month again. A 36 percent ceiling allows 2,340 of total monthly debt payments, 45 percent allows 2,925 and 50 percent allows 3,250.

Total ratio and housing-only ratio

You may see two versions of the figure. The total ratio, which the Fannie Mae limits above refer to, counts every monthly debt payment including housing. A housing-only ratio counts just the proposed mortgage payment against income. Some lenders look at both, so it is worth calculating each: if the housing figure alone is already high, reducing other debts will not help as much as choosing a smaller loan.

Outside the United States

Lenders elsewhere assess affordability in their own ways, and many look at net income and living costs as well as debts. The calculation above is still a useful personal check, but do not assume the US percentages apply to a loan in another country.

How to lower your debt-to-income ratio

There are only two levers: reduce the monthly debt payments or increase the income counted against them.

• Clear small balances completely. Paying off a card or a small loan removes its whole monthly payment from the calculation.
• Avoid new credit before applying. A new car loan or store card adds a payment and can push the ratio over a limit.
• Borrow less or for longer. A smaller loan or a longer term lowers the proposed payment, though a longer term raises total interest. Our guide to reading an amortization schedule shows that trade-off in numbers.
• Document all stable income. Regular income that is not on your main payslip may count if you can evidence it.

Rates affect the ratio too, because a higher rate means a higher payment on the same loan. Our explainers on how interest rates are set and APR vs interest rate cover what moves the cost of borrowing.

Common questions

What is a good debt-to-income ratio? Lower is better for lenders. For US mortgages, Fannie Mae starts manually underwritten loans at a 36 percent maximum, while its automated system allows up to 50 percent. Other lenders and countries set different limits.

Is the debt-to-income ratio based on gross or net income? The standard US definition uses gross monthly income, meaning pay before tax and deductions. Some lenders outside the US focus more on net income and spending.

Does rent count in the debt-to-income ratio? When you apply for a mortgage, the new housing payment replaces rent in the calculation. For other loans, lenders may include rent as a monthly obligation.

Can I get a US mortgage with a 50 percent debt-to-income ratio? Possibly. Fannie Mae allows up to 50 percent for loans assessed through Desktop Underwriter, but that is a ceiling. Lenders may set lower limits, and credit history, deposit and reserves are weighed as well.

Sources and further reading

Where the figures and rules above come from, so you can check them:

• Definition and worked example of the debt-to-income ratio: US CFPB
• Selling Guide B3-6-02, debt-to-income ratios (36, 45 and 50 percent limits): Fannie Mae
• Fixed-rate mortgage eligibility, including the 45 percent manual limit: Freddie Mac

Photo credits: MasterCard credit cards in jeans pocket by TheDigitalWay, CC0, via Wikimedia Commons. Bunch of credit cards (49860171753) by Yuri Samoilov, CC BY 2.0, via Wikimedia Commons.