Your debt-to-income ratio compares the amount of your debt (excluding your rent payment) to your income. The ratio is best figured on a monthly basis. 

For example, if your monthly take-home pay is $2,000 and you pay $400 per month in debt payment for loans and credit cards, medical bills and/or student loans, your debt-to-income ratio is $400 divided by $2,000 = 0.20 or 20%

For most lenders, the term “creditworthy” means keeping your DTI below 20%. A higher percentage means a higher risk (of credit trouble).

What Income do I count?

Your gross income is the amount earned before income taxes and other costs are deducted from your pay.


  • Wages earned
  • Permanent SSI or SSDI
  • Permanent Disability
  • Earned Income Tax Credit
  • Retirement Income

What Debt do I count?

Determine your monthly household debt. Include monthly credit card payments, student loan payments, medical bills, vehicle payments, other loan payments, and family support payments if any for all household members. Do not include utilities, groceries, or other miscellaneous expenses.

Important: List only the minimum required payment for each account, even if you pay more. Check your most recent account statements for each minimum monthly payment amount.

Even for deferred student loans, lenders will estimate a monthly loan payment typically at 1-2% of the total deferred loan amount.

At Tillamook Habitat we want your DTI ratio to be around 12%. That way when we estimate your mortgage payment (approximately 33% of your income) then add your debt of 12% it will be around 45%. This will leave you with 55% of your income for other life expenses!