A debttoincome ratio is a personal finance measure that compares the amount of debt you have to your gross income. Lenders use the debttoincome ratio as a way to measure your ability to manage the payments you make each month and repay the money you have borrowed. It is calculated by dividing your total recurring monthly debt by your gross monthly income.
To calculate your debttoincome ratio, start by adding up all of your recurring monthly debts, including:
 Mortgage
 Auto loans
 Student loans
 Minimum credit card payments
 Child support and alimony
 Any other monthly debt obligations
Next, determine your gross (pretax) monthly income, being sure to include:
 Wages
 Salaries
 Tips and bonuses
 Pension
 Social Security
 Child support and alimony
 Any other additional income
Finally, divide your total recurring monthly debt by your gross monthly income. The quotient will be a decimal; multiply by 100 to express your debttoincome ratio as a percentage.
Here's an example. Mary has the following recurring monthly debts:
 $1,000 mortgage
 $500 auto loan
 $200 student loan
 $200 credit card
 $400 other monthly debt obligations
Mary's total recurring monthly debt equals $2,300.
Mary has the following gross monthly income:
 $4,000 salary from primary job
 $2,000 from second job
Mary's gross monthly income equals $6,000
Mary's debttoincome ratio is calculated by dividing her total recurring monthly debt ($2,300) by her gross monthly income ($6,000):
Debttoincome ratio = $2,300 / $6,000 = 0.38
Multiply by 100 to express as a percentage:
0.38 X 100 = 38%
Mary's debttoincome ratio = 38%
Less debt and/or a higher income would lower (and improve) Mary's debttoincome ratio. For example, once Mary pays off her student and auto loans, her debttoincome ratio (assuming all other factors remain the same) would be:
Total recurring monthly debt = $1,600
Gross monthly income = $6,000
Debttoincome ratio = $1,600 / $6,000 = 0.27 or 27%.

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