Financial Obligations Ratio Calculator

The Financial Obligations Ratio Calculator helps you check if your regular debt payments are affordable compared to your total income. It combines housing costs, loan payments, and other recurring debts to show what share of your income goes to these financial commitments. Lenders use this ratio to decide if you can handle more debt responsibly. This tool belongs to the Personal Finance & Lending Risk Tools category.

Formula of Financial Obligations Ratio Calculator

Main formula:
FOR = Total Financial Obligations / Gross Income

Where:

• Total Financial Obligations = all recurring debt payments:
  • Mortgage or rent
  • Car loans, student loans, personal loans
  • Minimum credit card payments
  • Property taxes, insurance premiums (if not part of your mortgage payment)
• Gross Income = total income before taxes, for the same time period (monthly or yearly).

Common monthly version for lending:
FOR = (Monthly Debt Payments + Monthly Housing Costs) / Monthly Gross Income

What it shows:
How much of your income is already committed to existing debts and housing costs.

Reference Table

FOR Range	What It Means
Below 20%	Very healthy; plenty of room for extra expenses
20%–40%	Moderate; manageable for most people
Above 40%	High; risk of loan denial or financial stress

Example of Financial Obligations Ratio Calculator

Scenario:

• Mortgage payment: $1,200/month
• Auto loan: $300/month
• Credit card minimums: $100/month
• Gross monthly income: $4,000

Step 1: Add up obligations
$1,200 + $300 + $100 = $1,600

Step 2: Divide by gross income
$1,600 / $4,000 = 0.40

Result:
FOR = 40%

This means 40% of the income goes to debt and housing. Lenders may see this as the upper limit for comfortable repayment.

Most Common FAQs

It’s smart to check your ratio at least once a year or before applying for a big loan like a mortgage or auto loan.