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Is my debt healthy or stretched?

Your debt burden ratio shows how much of your income goes to repayments. Most lenders consider under 35% manageable.

Calculator education

Logic updated April 2026

This calculator computes your debt burden ratio — the share of monthly gross income consumed by debt repayments — and classifies the result on a four-tier risk spectrum from healthy (under 20%) to critical (50% or above). It's the same metric lenders use when assessing serviceability, so seeing your own ratio gives you a realistic view of how lenders will see you.

How this is calculated

Formula 

monthlyIncome = annualGrossIncome / 12 ; totalMonthlyDebt = sum of all monthly debt payments ; ratio = (totalMonthlyDebt / monthlyIncome) × 100

Step-by-step

  1. Convert annual gross income to monthly by dividing by 12
  2. Sum all monthly debt repayments across every category (mortgage, car loan, credit cards, personal loans, student loans)
  3. Divide total monthly debt by monthly income, multiply by 100 to get the ratio as a percentage
  4. Classify the result: healthy under 20%, moderate 20–35%, high 35–50%, critical 50% or above
  5. Build a per-debt breakdown so you can see which lines contribute most to the burden
Rounding mode
ROUND_HALF_UP
Precision
20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
Logic last reviewed

Assumptions & limitations

What this calculator assumes

  • Risk tiers: healthy <20%, moderate 20–35%, high 35–50%, critical ≥50%
  • Annual income is converted to monthly via ÷ 12
  • All debts are aggregated; no priority weighting between secured and unsecured debt
  • No taxation, no jurisdictional debt-service-ratio rules, no lender-specific thresholds

What this calculator doesn’t account for

  • Uses gross income — net (after-tax) income gives a more realistic affordability picture
  • Doesn't differentiate between secured (mortgage) and unsecured (credit card) debt risk
  • Doesn't include living expenses or other committed outgoings
  • Doesn't factor in jurisdiction-specific lender serviceability rules
  • Doesn't model variable income

Worked example

A graduate earning $60,000/year with $300/month student loan, $400/month car loan, $200/month credit card minimum.

Input Value
Annual gross income $60,000
Monthly debt payments $300 + $400 + $200 = $900

Monthly income: $5,000 — Total monthly debt: $900 — Ratio: 18% — Classification: healthy

$900 ÷ $5,000 × 100 = 18% — just below the 20% healthy threshold. The borrower has comfortable headroom for additional borrowing if needed, and lenders would view their serviceability as strong. If income dropped to $50,000, the ratio would rise to 21.6% (moderate).

Frequently asked questions

What is a debt burden ratio?

The percentage of your monthly gross income that goes to debt repayments. It's a quick proxy for how stressed your finances are by debt servicing. Below 20% is generally comfortable; 20–35% is manageable but tight; 35–50% is stressed; above 50% is unsustainable in most cases. Lenders use a similar metric (debt-to-income or debt-service ratio) when assessing borrowing capacity.

What is a healthy ratio for students?

For students still building income, healthy is typically below 15% — but most students with student loans on income-contingent or deferred repayment will see ratios of 0% during study because no required payment exists yet. The number becomes meaningful in the first few years post-graduation, where targeting under 20% gives room for life expenses and emergency cushion. Above 30% post-graduation often signals over-borrowing relative to expected earnings.

How does debt burden affect future borrowing?

Lenders typically cap total debt service at 35–45% of gross income when approving new loans. If you're already at 30% from existing debts, your additional borrowing capacity for a mortgage or car loan is limited to whatever produces a payment that doesn't push you above the cap. High existing debt burden directly limits future borrowing — the calculator's classification gives you a quick view of where you stand.

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