How much debt can you handle?
If your monthly debt is: P8,000
And your monthly net take-home-pay is: P32,000
Your debt-to-income ratio will be: P8,000 / P32,000 = 25%
Your debt-to-income ratio is presented as a percentage. In the example above, your debt-to-income ratio is 25%.
Generally, a debt-to-income ratio of over 40% is a sign that you may have too much debt. A high debt-to-income ratio means you may be denied further credit, or you may have to pay a higher interest rate if you take on more credit.
*Income refers to your net take-home pay (or your earnings minus takes and other deductions).