A debt ratio calculator will help you figure out your debt to income ratio which the bank will also do. Knowing this before you talk to the bank will let you know if you should or should not think about buying a home.
The first thing you should do is add up all of your monthly expenses. Do not include home expenses such as heat, electric and cable bills. You should include everything else such as loans, mortgages, car payments, insurance and condo fees. Make sure you also include the mortgage payment, taxes and condo fee of the new home you are looking at as well.
Then you need to add up all of your gross monthly income between everyone who is signing their name on the mortgage. Your gross income is the amount you get paid before taxes come out. Otherwise it would be called your NET income.
Now you can divide your monthly expenses into your gross income to get your debt to income ratio. It will give you a percentage that should not be over 40% including the expenses of the mortgage you are looking to get. It used to be 50% when the economy was strong but banks had to limit their amount of loans just like everyone else.
There isn't technically a debt ratio calculator because you just have to divide your debt into your gross income. However, you will need a mortgage calculator to get your new mortgage payment amount. Once you get the new mortgage payment you can add it to your monthly expenses.
So now you know how much the bank will allow you to borrow. If your debt ratio came out to less than 40% you can keep adding to the expenses to see how much you can really afford. Maybe you can afford a third mortgage and you didn't even know it.
Your debt percentage is very closely related to your borrowing power with the bank. They will take the amount you can afford per month and figure out how much of a mortgage that equates to in order to come up with your borrowing power. There isn't really a calculator for this either because you will just need an interest calculator to get the monthly payment.
The bank will figure out both so don't confuse them or weigh one less than the other. You should probably have the home you are looking to buy in front of you when calculating these numbers. That way you know the exact taxes and condo fee as well. You also might find a home slightly more expensive than what you first figured in for numbers.
