Debt-to-income ratio

One of the quickest ways to get a handle on your current financial picture is to calculate your debt-to-income ratio. Lenders look at your debt-to-income ratio when they consider if you are creditworthy.

A widely used measure of financial stability, debt-to-income ratio is calculated by dividing monthly minimum debt payments (excluding mortgage or rent payments) by monthly take-home income.

Other authorities may offer slightly different definitions of debt-to-income ratio. While variations will result in different percentage outcomes, the overall concept is the same: a debt-to-income ratio compares debt load to income.

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