Credit & Debt
Remaining headroom to a target ratio
How much additional monthly obligation fits before hitting a threshold — or how much must be cut if already over.
The Formula
Headroom = (Target ratio x Gross income) - Current debt payments
How much additional monthly obligation fits before hitting a threshold — or how much must be cut if already over.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| t | Target back-end ratio as a decimal | decimal | 0.36 for the conventional guideline, 0.43 for the qualified mortgage ceiling. |
What Each Symbol Means
tdecimal
Target back-end ratio as a decimal
0.36 for the conventional guideline, 0.43 for the qualified mortgage ceiling.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate debt-to-income ratio page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Debt-To-Income Ratio, filed under Finance. Every number the guide produces comes from substituting into this one line.