Add up all monthly debt payments, divide by gross monthly income, and multiply by 100. The result is a single percentage that says more about repayment capacity than the size of any individual debt.
How it is calculated
DTI = (total monthly debt payments ÷ gross monthly income) × 100
Total monthly debt payments include loan installments, car payments, credit card minimums, and any other recurring debt obligations.
Gross monthly income is income before tax and deductions. Include regular, reliable income only.
Everyday living costs — rent you pay as a tenant, food, utilities — are usually excluded from the standard DTI, though housing payments on a mortgage count as debt.
The result is a percentage: 30 means 30% of gross income is already committed to debt.
Example
Suppose you earn 40,000 THB per month before tax, and each month you pay 7,000 THB on a car loan plus 5,000 THB on a personal loan. Monthly debt payments total 12,000 THB, so DTI = (12,000 ÷ 40,000) × 100 = 30%.
If you now consider a new loan costing 6,000 THB per month, your DTI would rise to (18,000 ÷ 40,000) × 100 = 45% — a level at which many lenders hesitate and your own budget would feel the strain.
Understanding your result
As a rough and widely used guide: below about 36% is generally considered manageable, 36–43% deserves caution, and above 43% many lenders view as risky. These are conventions, not laws — thresholds differ between lenders and countries, and your own living costs matter just as much.
Before taking on a new debt, recalculate your DTI with the proposed payment included. If the new figure worries you, a smaller loan or a longer term brings the monthly payment — and the ratio — down.
If you are the lender, a borrower's honest DTI helps you set an installment they can actually sustain. An agreement built on an affordable number is worth more than a bigger one that fails.
Frequently asked questions
What is a good debt-to-income ratio?
There is no single official answer, but common practice treats under roughly 36% as comfortable and over about 43% as strained. Lenders in different countries draw the line differently, and someone with low living costs can safely carry more than these rules of thumb suggest — treat the ranges as a starting point, not a verdict.
Should I use gross or net income?
The standard DTI uses gross income — income before tax. That is what most banks compute. For your own budgeting, it is worth checking the ratio against net (take-home) income too, since that is the money that actually pays the bills; the net-based figure will be higher.
Do rent and utility bills count as debt?
Not in the standard calculation — DTI covers debt obligations like loans and credit cards, not living expenses. Mortgage payments do count because a mortgage is debt. Some lenders run a separate affordability check that considers rent, so they may still ask about it.
What counts as a monthly debt payment for a credit card?
The minimum required payment is the usual convention, since it is the amount you are obliged to pay. If you routinely pay the full balance, the minimum still represents your committed obligation for DTI purposes; your true monthly outflow is a separate budgeting question.
My DTI is high. What can I do about it?
Two levers move the ratio: reduce monthly debt payments or increase income. Practical steps include paying off the smallest debt to remove a payment entirely, refinancing or extending a term to lower an installment, and avoiding new commitments until the ratio falls. Small, steady changes compound quickly.
Why does DTI matter for informal lending between people?
Because it predicts repayment. If a friend asking to borrow already spends half their income on debt, a new loan is likely to fail regardless of good intentions. Discussing DTI turns an awkward judgement about character into a neutral conversation about numbers — and helps set an installment that fits.
Results are estimates for general information only and may differ from a lender's exact figures. They are not financial or legal advice.