What debt-to-income measures
Your debt-to-income ratio, or DTI, compares your total monthly debt payments to your gross monthly income, expressed as a percentage. It answers a simple question: of every dollar you earn before deductions, how much is already committed to debt service before rent, groceries or anything else is paid?
Lenders use DTI, alongside your credit score, to decide whether to extend new credit and at what rate. It differs from credit utilization, which looks only at revolving balances relative to limits — DTI captures every payment obligation, including a mortgage, auto loan, student loan and minimum credit card payments, against your total income.
Calculate your DTI
Enter your gross monthly income and your total monthly debt payments to see your current ratio and where it falls against the standard thresholds.
40.4%
Caution
Approaching a level that can limit access to new credit at favourable rates.
- Under 36% — considered healthy by most Canadian lenders.
- 36% to 42% — caution zone; new credit approvals may tighten.
- 43% to 49% — high risk; restructuring is worth discussing.
- 50% and above — critical; contact FDR Asset Group or a Licensed Insolvency Trustee.
Reading the thresholds
Ratios are grouped into four bands that most Canadian lenders and credit counsellors reference:
- Under 36% — healthy. Debt service is well within typical lending guidelines, and most applications for new credit should proceed normally.
- 36% to 42% — caution. Still workable but leaving less room for an income disruption or rate increase at renewal.
- 43% to 49% — high risk. A significant share of income is committed to debt; new credit approvals often tighten and restructuring is worth discussing.
- 50% and above — critical. Difficult to sustain without a change in payments or income. This is the range where a conversation with FDR Asset Group or a Licensed Insolvency Trustee becomes a priority rather than an option.
DTI is not the same as your credit score
You can have a strong credit score and a high DTI at the same time, particularly after taking on a mortgage. Track both — a payment history that stays current does not always mean the underlying ratio is sustainable.
Bringing your DTI back into range
There are only two levers: reduce the numerator (monthly debt payments) or increase the denominator (income). On the payment side, consolidating high-rate balances into a single lower-rate loan, negotiating a rate reduction, or restructuring a delinquent account into a smaller monthly figure all lower the ratio directly. Extending an existing loan term can also lower the monthly payment, though it typically increases total interest paid.
On the income side, even a modest secondary income stream shifts the ratio meaningfully for households near a threshold boundary. If neither lever is available, a formal restructuring — discussed with the creditor or with FDR Asset Group if we hold your account — is the more durable fix.
Ongoing monitoring
Recalculate your DTI whenever income changes, a new loan is taken on, or a major account is paid off. Because the ratio uses gross income, remember to update it after a raise, job change or reduction in hours — the number can shift meaningfully in either direction even if your debt payments stay flat.