How to calculate your debt-to-income ratio
The formula is simple: DTI = total monthly debt payments ÷ gross monthly income × 100.
- Add up your monthly debt payments. Use what you have to pay each month: the minimum on each credit card, your loan and car finance instalments, any overdraft or buy now pay later repayments, and your mortgage if you have one.
- Work out your gross monthly income. Take your annual salary before tax and divide it by 12. Lenders usually start from gross income, then check your actual spending separately.
- Divide and multiply by 100. £900 ÷ £3,000 = 0.30, so a DTI of 30%.
The calculator shows two figures: your ratio including a mortgage, and your ratio for non-mortgage debt only. Lenders look at both. A mortgage is a large commitment, but it's long-term and secured on your home; a high ratio of credit card and loan payments is a stronger warning sign.
What is a good debt-to-income ratio in the UK?
There's no official UK limit, and every lender sets its own criteria. As a rule of thumb, these bands are a sensible guide:
| DTI | Rating | What it usually means |
|---|---|---|
| Under 15% | Excellent | Debt takes a small share of your income. Most lenders see this as low risk. |
| 15% to 25% | Good | Manageable for most people, with room to absorb a rise in costs. |
| 25% to 35% | Caution | Affordable on paper, but a tighter budget. Some lenders may offer less or charge more. |
| 35% to 50% | High | Debt is squeezing your budget. New credit is harder to get, and it's worth focusing on paying down what you owe. |
| Over 50% | Danger | Half or more of your income goes on debt. If you're struggling to keep up, get free debt advice now. |
These bands use gross income. Your take-home pay is lower, so the real squeeze on your budget is bigger than the percentage suggests. The budget builder shows what's genuinely left once tax and essential bills are paid.
Debt-to-income ratio and getting a mortgage
UK mortgage lenders don't approve or decline on DTI alone. Under Financial Conduct Authority rules they must check that a mortgage is affordable. That means looking at your income, your committed spending (including existing debt repayments) and whether you could still pay if interest rates rose. Separately, most lenders cap the loan at around four to four and a half times your income.
Your existing debt matters because every pound you pay to a card or loan is a pound the lender assumes you can't put towards the mortgage. Clearing a car finance agreement or a credit card before you apply can increase how much you're able to borrow, and lower your DTI at the same time.
How to lower your debt-to-income ratio
- Clear whole debts, not just balances. Paying off a small loan removes its entire monthly payment, which lowers your ratio faster than spreading overpayments thinly. That's the idea behind the debt snowball.
- Avoid new borrowing, including buy now pay later, while you're preparing to apply for a mortgage or loan.
- Be careful with consolidation. A longer loan can lower your monthly payment and your DTI, but it usually costs more interest overall. The debt consolidation calculator shows the true cost.
- Increase your income where you can. Overtime, a pay rise or a second job all lower the ratio.
If your repayments take more than you can afford, a lower ratio isn't the first priority: getting help is. StepChange, National Debtline and Citizens Advice give free, confidential advice, and a debt management plan may reduce your payments.