Your debt-to-income ratio (DTI) compares your total monthly debt payments to your gross monthly income. It's one of the key numbers lenders use alongside your credit score to assess whether you can comfortably take on a new payment.
How to Calculate It
Add up all your monthly debt payments (loans, credit cards, car payments) and divide by your gross monthly income, then multiply by 100 for a percentage. There's no single fixed Canadian standard, but a DTI under roughly 36% is a commonly cited general guideline — individual lenders in our network set their own specific thresholds.
Why It Matters for Approval
A high DTI signals to lenders that a large share of your income is already committed, leaving less room for a new payment — this can affect both approval and the loan amount you're offered.
How to Improve Your DTI
- Pay down existing debt balances before applying
- Avoid taking on new debt shortly before a loan application
- Increase your income, even temporarily, if possible