Debt to income ratio for a mortgage
Your debt to income ratio is your monthly debt payments as a share of your gross monthly income. Here is how to work it out the way lenders do, what the levels mean, and what brings it down.
Quick answer
Debt to income ratio is your monthly debt payments divided by your gross monthly income. On £75,000 a year, £15,000 of card balances (counted at 3%, so £450) plus £250 of car finance is £700 a month against £6,250, a debt to income ratio of 11.2%. That is comfortable for most lenders.
Under about 20% is comfortable. Between 20% and 36%, some lenders lend less. Above about 45%, most decline.
Updated today
The formula
Debt payments ÷ gross income
£700 a month on £6,250 a month is 11.2%.
The debt to income ratio checker in Theo
Theo counts your debts the way lenders do, shows where your ratio sits, and Premium shows which debts to clear first to bring it down fastest.
What counts
- CardsAbout 3% of the balance a month.
- LoansCar finance and personal loans.
- OtherBuy now pay later, store cards.
Mostly card debt?
See what clearing it is worth.
Debt to income ratio levels
| Debt to income ratio | What it usually means |
|---|---|
| Under 20% | Comfortable for most lenders |
| 20% to 36% | Some lenders lend less |
| 36% to 45% | Fewer lenders, and more checks |
| Over 45% | Most lenders are likely to decline |
Cards count however little you pay
Lenders often count 3% of the balance a month, even if you clear it in full.
Debt to income ratio checker
Counts credit card balances at 3% a month, as many lenders do.
Your debt payments are a small part of your income.
How to work out your debt to income ratio
Add up your monthly debt payments: loans, car finance, buy now pay later and store cards, plus about 3% of your total credit card balances. Divide by your gross monthly income, which is your yearly income before tax divided by twelve, and multiply by 100. The mortgage itself is not included, because the lender is working out what is left for it.
How UK lenders use it
UK lenders do not usually set a single debt to income ratio limit. Instead your debt payments reduce what they think you can afford, and some lenders lower their income multiple once debt payments pass about 20% of income. Above about 36%, many refer the case for a closer look; above about 45%, most decline. See how much you can borrow.
Mortgage to income ratio
A different measure is how big your mortgage is compared with your income, usually about 4.5 times for most lenders. And many people aim to keep the mortgage payment itself below about a third of take home pay, although lenders work it out from your whole budget rather than a simple rule.
Bringing your debt to income ratio down
Clearing credit cards usually makes the biggest difference, because lenders count 3% of the balance every month. Paying off a small loan, or one nearly finished, removes its payment entirely. Avoid new credit before applying. See mortgages with credit card debt.
If your ratio is high
If your debt payments are a large part of your income and you are finding them hard to manage, speak to a free debt adviser before taking on a mortgage. MoneyHelper (moneyhelper.org.uk) can point you to one.
Common questions
What is a good debt to income ratio for a mortgage?
How do I calculate my debt to income ratio?
Is the mortgage included in debt to income?
Do credit cards count if I pay them off every month?
What is a mortgage to income ratio?
Keep exploring
Theo App Ltd is not authorised by the Financial Conduct Authority and does not give mortgage advice. This page is information only and is not a recommendation. A general guide, not a decision or an offer. Speak to an FCA-authorised mortgage adviser about your own circumstances.
Your home may be repossessed if you do not keep up repayments on your mortgage.