Debt-to-Income Calculator
This calculator works out your debt-to-income (DTI) ratio and the payment headroom you have against a 40% total debt-service guideline. The 36%, 40%, and 44% bands are conventional lender guidelines, not a legal rule, and they do not promise approval or predict denial.
How this calculator works
The debt-to-income (DTI) ratio compares your total monthly debt payments with your gross monthly income. Lenders use it as one signal of how comfortably you could carry a new payment, alongside your credit history and other factors.
Formula: dtiPct = (monthlyDebts + proposedPayment) ÷ monthlyIncome × 100. The payment headroom at a 40% guideline is monthlyIncome × 0.40 − monthlyDebts − proposedPayment, which is the room left before total debt payments reach 40% of income.
The 36%, 40%, and 44% bands are conventional lender guidelines, not a legal rule. They are rules of thumb used in mortgage and loan underwriting, and different lenders set different limits. A result in the comfortable band does not mean you will be approved, and a result in the high band does not mean you will be declined. Only the lender decides, using its own criteria.
Use the ratio as a planning check. If the proposed payment pushes you into a higher band, a smaller payment, a longer term, or paying down an existing balance first can lower the ratio. It also does not account for taxes, living costs, or savings, so treat it as one input among several. This is general information, not financial advice, and it is not a credit decision.
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Frequently Asked Questions
What is a good debt-to-income ratio?
There is no single legal number. Many lenders look for total debt payments below about 36% to 40% of gross income, but each lender sets its own rule and considers other factors.
Are the 36%, 40%, and 44% thresholds a legal limit?
No. They are conventional lender guidelines used in underwriting, not a legal rule, and they vary by lender and product.
Does this tell me if I will be approved?
No. It is a planning estimate. Only a lender can decide, and it uses your credit history, income, and other criteria as well.
What counts as monthly debt?
Payments on credit cards, loans, lines of credit, car payments, and similar obligations. Include the minimum or scheduled payment for each.
How can I lower my ratio?
Reduce existing balances, avoid taking on new debt, or choose a smaller payment. Increasing income also lowers the ratio.
Last updated: September 16, 2026 · By the Instalment.ca Editorial Team
We research Canadian lending rules and update these pages when the law, the data, or the available offers change. We are not a lender and we do not provide personal financial advice.
Instalment.ca is a loan matching and comparison service, not a lender.
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This is general information, not financial, legal, or tax advice.
Rates and terms vary by lender, creditworthiness, and province. Figures shown are examples only.