4.1.6 Calculating debt ratio

Example: Tomás and Carlos own a townhouse together. Tomás is a computer salesperson, and Carlos does part-time carpentry work. Between them, they earn $3,500 a month (before taxes).

Their combined debt payments include:

Debt Payments
Debt payments	Monthly amount
Monthly mortgage payment, including property taxes and insurance	$1,250
Monthly auto loan payment	$500
Personal loan payment	$200
Total monthly debt expenses	$1,950

Tomás and Carlos' total debt ratio works out to:

$1,950 (total monthly debt payments) ÷ $3,500 (total monthly income) X 100 = 56%

This is higher than recommended.

Tomás and Carlos consider what their debt ratio will be if they buy a townhouse.

My debt ratio

Use this chart to determine your own debt ratio.

Income	Monthly amount
Monthly household income before taxes	$ Invalid format.

Debt payments
Debt payments	Monthly amount
Monthly mortgage payment (including taxes and insurance)	$ Invalid format.
Home equity loan payment	$ Invalid format.
Auto loan payment	$ Invalid format.
Monthly credit card bills (minimum monthly payment amount on all statements)	$ Invalid format.
Personal loan payment	$ Invalid format.
Student loan payment	$ Invalid format.
Child support and alimony payment	$ Invalid format.
Other Monthly Debt Payments Label 1 Other monthly debt payments	Other Monthly Debt Payments Value 1 $ Invalid format.
Other Monthly Debt Payments Label 2 Other monthly debt payments	Other Monthly Debt Payments Value 2 $ Invalid format.
Total monthly debt payments	$0.00

Debt ratio

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Date modified:: 2019-03-01