Having a high debt-to-income ratio could stand in the way of getting new credit in the future. And, it's indicative of your overall financial health, says Pak. "Debt-to-income ratio is key for me because it gives me an idea of how much money is left over after all your obligations have been paid," he says.
While your debt-to-income ratio might be in good shape now, you'll also want to consider what it will look like once one income is gone.
You can calculate this figure by adding up all of your monthly payments and dividing that number by your monthly income. While lenders tend to use gross monthly income (how much money you bring home before taxes) for this calculation, Pak suggests calculating your debt-to-income ratio with your net income, or the amount you see coming into your account each month after taxes.
He suggests keeping your debt-to-income ratio below 45% (.45) for this situation. "If it's above 45%, I think you're risking it," he says.