Debt-to-Income

The two ratios a lender reads, housing alone and everything together, and how much room is left.

Formula

How the calculation works

A lender reads two ratios, not one. The front-end is the housing payment against income; the back-end adds every other debt payment on top. Keeping housing within 28% and everything within 36% is the common rule, and both ceilings are shown so the binding one is obvious.

The useful output is the gap. A borrower at 36% with a car loan has no room for a bigger mortgage, while one at 28% has room and can see exactly how much. That turns a refusal into a number to work on.

Common mistakes

• Counting only the mortgage and forgetting card, car and personal loan payments. Those sit in the back-end ratio and are what usually pushes a borrower over the line.
• Reading the ratio against gross income when the lender uses gross and the borrower is thinking net. The two figures can differ by a third.

When to use it

• Use it before applying for a mortgage, so you know which ceiling you are near and what would move you under it.
• It is also the tool after a refusal: run the numbers with the card cleared and see whether that alone is enough to qualify.

Worked example

On 5,000 a month with a 1,400 housing payment and 400 of other debt: 28% front-end and 36% back-end.

Common questions

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Last updated: 2026-09-29