1. What is Debt To Income Ratio (DTI)?

Definition: DTI is a personal finance measure that compares an individual's monthly debt payments to their gross monthly income.

Purpose: Lenders use DTI to evaluate a borrower's ability to manage monthly payments and repay debts.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( DTI \) — Debt to income ratio (percentage)
• \( Debt \) — Total monthly debt payments (CAD)
• \( Income \) — Gross monthly income before taxes (CAD)

3. Importance of DTI in Canada

Details: Canadian lenders typically prefer a DTI ratio below 42-44% for mortgage approvals. A lower DTI indicates better financial health.

4. Using the Calculator

Tips: Enter your total monthly debt payments and gross monthly income in Canadian dollars. Income must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What debts should be included?
A: Include all monthly debt obligations - mortgages, car loans, credit cards, student loans, and other recurring payments.

Q2: What's considered a good DTI in Canada?
A: Generally: <36% (excellent), 36-42% (acceptable), 43-49% (stressed), >50% (high risk).

Q3: Does this include housing expenses?
A: Yes, mortgage or rent payments should be included in your total monthly debt calculation.

Q4: How can I improve my DTI ratio?
A: Either increase your income or reduce your debt obligations (pay down balances, consolidate loans, etc.).

Q5: Is gross or net income used?
A: Lenders use gross income (before taxes) for DTI calculations in Canada.