Calculate your DTI ratio to see if lenders will approve your mortgage or loan application.
By Konstantin Iakovlev · Founder, Calks.uk
Last updated: · Verified against UK lender and FCA 2026 guidance
Rates verified: 28 September 2026
Monthly Debt Payments
Disclaimer
This calculator is for guidance only. It is not financial or tax advice: check anything you rely on against the official source or a qualified adviser. Rates and figures come from lenders' published rates and FCA guidance and are reviewed for 2026. Everything is calculated in your browser; nothing you enter is sent to our servers.
How It Works
Your debt-to-income ratio (DTI) measures the proportion of your gross monthly income that goes toward debt repayments. Lenders use it as a key affordability indicator when you apply for a mortgage, loan or credit card. A lower ratio signals that you have sufficient income headroom to take on new credit, and it is one of the first figures an underwriter looks at, well before anyone gets into the detail of your bank statements.
The sum itself is simple. Divide your total monthly debt payments by your gross monthly income, then multiply by 100 to get a percentage. The count covers your mortgage or rent, credit card minimum payments, personal loans, car finance, student loan repayments and child maintenance. It leaves out household running costs such as utilities, council tax, groceries and transport. On £4,000 of gross monthly income, a £1,500 mortgage plus £200 of credit card minimums and £300 of car finance comes to £2,000 of debt, which is a DTI of 50%.
Most UK lenders prefer a ratio under 35% to 40%, and anything above 50% is treated as high risk that sharply reduces your chance of approval. As a rough ladder, 0-15% is excellent and leaves room to save and invest, 15-30% is healthy and typical of UK households, 30-40% is high but manageable, and 40-50% is stretched and vulnerable to a rate rise or a job loss. The UK household average in 2025 was about 33%, with mortgage-holding households above 40% and those without a mortgage nearer 10%.
Mortgage underwriting applies the same idea with tighter limits. Housing costs alone are usually capped at 35-40% of gross income and tested at a stress rate the lender sets above the rate on offer, with total debt of 40-45% of gross income the practical ceiling. A first-time buyer earning £40,000 has £3,333 of gross monthly income, so housing costs of about £1,200 a month support a mortgage of roughly £190,000 at the September 2026 average two-year fix of 5.73% over 25 years. Add £400 a month of car finance and card payments and borrowing capacity falls by about £64,000.
How your income is counted matters as much as its size. Self-employed applicants are assessed on 2-3 years of accounts averaged out, contractors on their day rate multiplied by 5 and then by 46 weeks, and bonus income is usually taken at 50%. Tax credits and Child Benefit generally count, while applicants relying on benefits alone face a strict assessment. Lenders group housing costs as PITI, meaning principal, interest, taxes and insurance, then stack every other commitment on top before testing the total against the stress rate.
Bringing the ratio down before you apply is usually easier than raising income. Clearing the smallest balances first (the snowball) keeps momentum up, while attacking the highest interest rate first (the avalanche) is mathematically better and can save hundreds or even thousands of pounds in interest. Moving £3,000-£5,000 of card debt to a 0% balance transfer deal for 24-32 months, typically for a 3% fee, buys breathing space. A consolidation loan can replace several debts with one lower combined APR, and every extra £100 of monthly income moves the ratio the same way.
Example: £3,500 gross monthly income
- Mortgage payment: £850/month
- Car loan: £200/month
- Credit card minimum: £75/month
- Total monthly debt: £1,125
- DTI ratio: £1,125 ÷ £3,500 × 100 = 32.1%, within acceptable range
Frequently Asked Questions
- Why does my debt-to-income ratio matter to a lender?
- It is one of the first affordability checks a lender makes, showing how much of your gross monthly income already goes on debt repayments. The lower the figure, the more room you have to take on a mortgage or loan, and the better the terms you are likely to be offered. A high ratio does not always mean refusal, but it narrows the number of lenders willing to look at the application.
- Which debts count towards my debt-to-income ratio?
- Regular credit commitments count: your mortgage or rent, credit card minimum payments, personal loans, car finance, student loan repayments and child maintenance. Household running costs stay out of it, so utilities, council tax, groceries and transport are excluded. That is why a household with a heavy grocery bill can still show a low ratio, while one with modest bills and several credit agreements looks stretched on paper.
- What DTI do UK mortgage lenders actually accept?
- Housing costs are usually held to 35-40% of gross income, with all debts together capped around 40-45%. The test is usually run at a stress rate the lender sets, typically 1-3 points above the rate you are offered, so a payment that looks affordable today still has to work if rates climb. A ratio in the 15-30% band is comfortable, 40-50% is stretched, and above 50% most mainstream lenders decline. Some specialist lenders go higher for applicants with proven income and clean credit.
- How can I lower my debt-to-income ratio before applying?
- Because the ratio counts monthly payments rather than balances, the quickest wins come from removing whole commitments. Settling a small car finance agreement outright can help more than overpaying a large mortgage. Attacking the highest interest rate first saves the most money overall, while clearing the smallest balances first gives visible progress sooner. A consolidation loan replaces several agreements with a single payment, often at a lower combined APR. Raising income works too, since every extra £100 a month shifts the figure.