How To Calculate Your Debt To Income Ratio

The next step to determining your debt-to-income ratio is calculating your monthly income.

Start by totaling your yearly income. Add up your yearly:

• Gross income
• Bonuses or overtime
• Alimony/child support
• Other income

Then, divide your yearly income by 12 to determine your monthly income.

Example

Remember, Sam spends $1,540 each month on debt payments. This is what he receives in income each year.

• annual gross income = $42,000
• child support = $6,000

Sam's total annual income = $42,000 + $6,000 = $48,000.
Let's divide his annual income by 12 for his monthly income.
$48,000 / 12 = $4,000 monthly income