Financial Glossary
Debt-to-Income (DTI) Ratio
The debt-to-income (DTI) ratio is the percentage of your gross monthly income that goes toward debt payments, including mortgages, credit cards, student loans, auto loans, and other debts. Lenders use DTI to assess your ability to manage monthly payments and repay borrowed money. A lower DTI indicates better financial health.
Example
If your gross monthly income is $6,000 and your total monthly debt payments are $2,100 (mortgage: $1,500, car loan: $400, credit cards: $200), your DTI ratio is 35%. Most lenders prefer DTI ratios below 43% for mortgage approval, and below 36% for optimal rates.
Frequently Asked Questions
What is a good debt-to-income ratio?
A DTI ratio below 36% is considered good, with no more than 28% going toward housing costs. Ratios between 36% and 43% may still qualify for loans but with less favorable terms. Above 43%, mortgage approval becomes difficult.
How can I improve my DTI ratio?
Pay down existing debts, increase your income, avoid taking on new debt before applying for a mortgage, and consider consolidating high-interest debts. Our mortgage calculator can help you determine an affordable home price based on your DTI.
Related Resources
Official Sources
Canada calculators use data from the following official government agencies:
- Canada Revenue Agency (CRA) — Federal and provincial income tax rates, CPP contributions, and RRSP limits.
- Statistics Canada — Employment data, income statistics, and housing market data.
- Bank of Canada — Interest rates, inflation data, and mortgage rate benchmarks.
Methodology
Our Canadian calculators use federal and provincial tax brackets, CPP/QPP contribution rates, and EI premiums published by the Canada Revenue Agency (CRA). Economic data is sourced from Statistics Canada. Mortgage calculations use Bank of Canada rates and market averages. All figures are for educational purposes.
Data Sources
All tax brackets, contribution rates, and economic data used in our calculators are sourced from the official government publications listed above. Rates are updated at least annually to reflect the latest tax year and regulatory changes. Users should verify critical figures with official sources or qualified professionals.
Last updated: June 2026. Information may change; always verify with official sources.
Last Updated: June 2026 — Reviewed Against Official Sources