Debt to Income Ratio Calculator

The Debt-to-Income Formula

Your debt-to-income ratio (DTI) is total debt divided by gross annual income. A ratio of 5 means your debt is five times one year's income before tax. This calculator compares that multiple before and after a proposed loan.

For example, $750,000 of debt divided by $150,000 of annual income gives a ratio of 5. Entering monthly income in the annual field would inflate the result twelvefold. A monthly repayment divided by monthly income answers a different question about cash flow.

What to Include in Debt and Income

The default calculation adds existing term-loan debt to revolving credit limits. Include all applicants' debts, including mortgages, personal loans and relevant consumer finance. Enter cards and revolving facilities in the separate field so each debt counts once.

A drawn balance is the amount owing. A facility limit also includes available credit you have not used. A repayment is the amount paid each period. Switching to Drawn balances lets you compare actual revolving debt owing, while Credit limits counts the available exposure.

The Australian Prudential Regulation Authority (APRA) defines DTI using credit limits and annual income before tax. Its residential mortgage reporting standard uses amortised term-loan debt before offsets and excludes Higher Education Loan Program (HELP) balances. For revolving facilities, use the facility's credit limit in the default mode.

Enter combined gross annual income before lender discounts, excluding employer superannuation contributions. Include income only once across applicants. The drawn-balance mode is an alternative comparison, so its result must not be treated as APRA's reporting ratio.

Before and After the New Loan

The proposed ratio adds the full new loan and subtracts existing debt removed by the transaction. For refinancing, enter the replacement loan in full and remove the old loan once. Under Credit limits, paying off a card leaves its limit counted unless the facility closes or its limit reduces.

The starting example has $450,000 of term debt, $20,000 in revolving limits and $150,000 of gross annual income. Current debt is $470,000, or 3.13 times income. Adding a $350,000 loan without removing debt gives $820,000, or 5.47 times income.

At the example target of 5, that income supports $750,000 of debt by this formula. Reducing proposed debt by $70,000 reaches the target. Alternatively, $820,000 divided by 5 requires $164,000 of annual income, an increase of $14,000.

The debt-reduction result holds income fixed. The income result holds debt fixed, so these are separate ways to reach the target. Change the target to test another multiple or clear it to see only the current and proposed ratios.

DTI and Serviceability

DTI measures debt exposure against annual income. Serviceability tests whether income can cover assessed repayments and living expenses. Two households with the same DTI can have different borrowing capacity because their expenses, tax and loan terms differ.

APRA's system risk outlook describes a limit on banks' share of new lending at ratios of six or more. The 20% limit applies separately to owner-occupier and investor lending. It is a portfolio restriction, not an automatic approval below six or rejection above it.

This DTI calculator uses the debt and income you enter. It does not assess credit history, property security or the lender's full servicing rules. Use the related borrowing-power calculator to estimate repayment capacity alongside this exposure comparison.