Debt burden

Debt burden is the cumulative share of your income consumed by debt repayments. It’s expressed as a percentage of monthly gross income and used by lenders, financial counsellors, and households as a quick measure of financial health.

How it’s calculated

Sum every monthly debt repayment — student loan, car loan, credit card minimums, personal loans, mortgage if applicable — and divide by monthly gross income.

Debt burden = total monthly debt repayments ÷ monthly gross income × 100

A graduate earning $5,000 a month with $500 in student loan repayments and $300 in car loan repayments has a debt burden of 16%.

The four-tier classification

Most lenders converge on similar thresholds:

• Healthy: under 20%. Comfortable. Room for an emergency fund, savings, and unexpected costs.
• Moderate: 20–35%. Workable for most borrowers, but the buffer is narrower.
• High: 35–50%. Stretched. New mortgage applications are usually declined here. Refinancing or consolidation often helps.
• Critical: 50% and above. Unsustainable. Free financial counselling is the right next step.

What it captures (and doesn’t)

Debt burden measures the size of repayments, not their cost. A 30% burden carrying 5% student loans is in a very different position to a 30% burden carrying 20% credit card debt — the repayment percentages match, but the underlying financial health doesn’t. The ratio is the first check, not the final word. It’s the same idea as the debt-to-income ratio used in lending decisions.

The debt burden ratio calculator computes the percentage and risk classification with a per-debt breakdown. The student loan payoff calculator shows how extra student loan payments reduce the monthly commitment over time.