Debt-to-income ratio
The figure a lender looks at before any other. Not how much you earn, but how much of it is already spoken for.
Your figures
Result
- Current debts$2508.9%
- New payment$70025.0%
- Left over$1,85066.1%
- Committed each month
- $950.00
- Left to live on
- $1,850.00
- Room up to 35%
- $30.00
- Maximum payment at 35%
- $980.00
Your income, in parts
| Item | Per month |
|---|---|
| Current debts | $250.00 |
| New payment | $700.00 |
| Left over | $1,850.00 |
What we assume
- Calculated on net income, not gross.
- The 35% reference is standard lender practice, not law.
- All debt payments count; ordinary living costs do not.
- A lender will also weigh job stability and the deposit you bring.
How it is calculated
It is one division:
ratio = (current payments + new payment) / net income × 100
On £2,800 net, £250 of debt and a £700 mortgage: 950 / 2,800 = 33.93%.
Why 35%
No law says so: it is the reference lenders use, and it comes from central-bank guidance as a prudent threshold. Below it, an unexpected bill gets absorbed; above it, any rate rise or bad month turns into a missed payment.
It gets applied with some flexibility. On high incomes it stretches, because the remaining 65% is a lot of money in absolute terms; on low incomes it tightens, because 65% of £1,200 leaves little room even though the percentage is the same. The ratio is a percentage and life is paid in pounds, which is why we also show what is left.
What counts as debt
Anything that is a committed payment: car finance, personal loans, buy-now-pay-later, the minimum on a revolving card, maintenance payments, and any guarantee you have signed even if somebody else pays it. That last one surprises a lot of people at mortgage time.
What does not count is rent - if you are leaving it for the mortgage - utilities, food or school fees. Those are costs, not debt, and the lender assumes them inside the remaining 65%.
The other direction
If your ratio comes out high there are three levers and only one is quick: a longer term lowers the payment (and raises total interest), a bigger deposit lowers the amount, and clearing a small loan frees up ratio immediately. Getting rid of £250 a month of car finance can be worth more than saving another £10,000 of deposit.
An example
On £2,800 net a month, £250 of existing payments and a new mortgage of £700, the ratio is 33.93%. That leaves £1,850 to live on and just £30 of room up to 35%.
Frequently asked questions
Gross or net income?
Net, what arrives in the account. It is the most common mistake and not a small one: on a gross salary of £36,000 and around £2,300 net a month, using gross gives a ratio 23% below the real one, and the lender will work it out properly.
Do both applicants’ incomes get added?
Yes, if both are on the loan. Net incomes add up and so do all the debts of both. One applicant with car finance drags that ratio into the joint application.
What about bonuses and extra payments?
Spread them across the year. If you get fourteen payments, multiply by fourteen and divide by twelve: £2,000 in fourteen payments is £2,333 a month for this purpose. That is how a lender does it.
Will I be declined above 35%?
Not automatically, but it is the first red flag and the most frequent reason for a decline. With a high income, a permanent contract and a solid deposit, deals get done at 40%. On a marginal profile, 36% can be enough for a no.
Keep calculating
All tools →- Loan payment calculator Work out the monthly payment on a loan or mortgage and, above all, how much you will end up paying in interest.
- Loan amortisation schedule Every payment broken down. The interesting part is not the total, it is watching how long it takes before you are mostly paying off the debt.
- Early repayment: term or payment One lump sum, two ways to use it. Which saves more interest is not close, but the other one has its reasons.
- How much mortgage can I afford Two things limit you: what you can pay each month and what you have saved. We tell you which one is binding, because that decides what to do about it.
- From nominal rate to APR The nominal rate is what they advertise; the APR is what compares. Here is the real APR, with the arrangement fee spread across the life of the loan.
Updated on 2026-09-11. Calculations run in your browser; nothing you type is sent to a server.