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Calculate Your Debt-to-Income Ratio

Why do you need to know it? Because lenders use it as a measure of your ability to repay the money you have borrowed or to take on additional debt like a mortgage or a car loan.


How to Calculate It

Next, determine your gross (pre-tax) monthly income, including:

  • Wages
  • Salaries
  • Tips and bonuses
  • Pension
  • Social Security
  • Child support and alimony
  • Any other additional income

Now divide your total recurring monthly debt by your gross monthly income. The quotient will be a decimal; multiply by 100 to express your debt-to-income ratio as a percentage.


Can You Afford a Purchase?


Example

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About Amy Harvey

Amy R. Harvey writes forStartUps Sections In AmericaRichest.

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