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
$
Debt payments
Debt payments Monthly amount
$

$

$

$

$

$
$
$
$
Total monthly debt payments $0.00
Debt ratio
0%
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