What the debt-to-income ratio is
The debt-to-income ratio (DTI) compares the money you pay towards debts each month with the money you earn each month. Banks in Pakistan usually call it the debt burden ratio, or DBR. The idea is the same under both names. It shows how much of your income is already committed to lenders before you pay for food, rent, school fees and other daily costs.
A lender uses it to answer a simple question: if we give this person a new loan, can they still make every instalment on time?
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How to calculate it
- Add up your monthly debt payments. Include every loan instalment: car finance, personal loan, home finance, and the minimum payment on each credit card. If a lender also asks you to count rent or other fixed obligations, add those as well.
- Take your monthly income. Most lenders use gross income, which is income before tax. Some use net income, which is the take-home amount. Ask the lender which one it uses.
- Divide total monthly debt payments by monthly income and express the result as a percentage.
A lower result means more room in your budget. A higher result means a larger share of your income already goes to debt.
When you apply, the lender adds the proposed new instalment to your existing payments and recalculates. Your ratio after the new loan is the figure that decides approval.
Working out how much loan you can afford
To estimate the instalment on a home loan and see what share of your income it would take, use the calculator below. Enter the property price, down payment, interest rate and term. It shows the monthly payment, the total cost of the loan and the payment-to-income ratio.
Fill in the empty fields to see the result.
| Year | Interest paid | Principal | Balance |
|---|
Loan = price − down payment; payment by the annuity formula A = P × i / (1 − (1 + i)^−n). Bars: principal (yellow) and interest (grey) per year. Fees, insurance and rate changes are not included.
Change the inputs and watch how each one moves the result:
- A longer term lowers the monthly payment but raises the total interest you pay.
- A larger down payment reduces the amount borrowed, so both the instalment and the total cost fall.
- A higher rate raises the instalment for the same amount borrowed.
The way the instalment is structured also matters. Equal (annuity) payments and declining (differentiated) payments create different monthly burdens. See Loan Payment Types.
Interest rates and your ratio
Many loans in Pakistan, including most home and car finance, are floating-rate. They are priced over a benchmark such as KIBOR, which follows the State Bank's policy rate. When the policy rate rises, your instalment can rise even though your income has not changed. Your DBR then goes up.
The most recent decision we have on record is: SBP policy rate raised by 50 bps to 12% with effect from 27.10.2026 (MPC). Check the current rate on the official SBP site before you calculate. Background is in SBP rates and economy.
Test the calculator with a higher rate than today's to see whether the payment would still fit your budget.
What lenders look at besides the ratio
- Credit history. Your record of past repayments affects approval and pricing. See Credit Score.
- Income stability. Lenders treat a salaried job and business income differently, and they also look at how long you have had it.
- The true cost of the loan. Fees and how the rate is calculated change what you really pay. See Effective Loan Rate.
- Their own limits. Each lender sets its own maximum DBR and its own rules on which income counts. Ask the lender for its current criteria.
Keeping the ratio under control
- Pay down high-cost revolving debt first. Credit card balances are often the most expensive. See Credit Card Interest.
- Avoid stacking short-term or app-based loans. Read Debt Traps.
- Keep an emergency fund so a missed salary does not become a missed instalment.
- Consider early repayment if the loan terms allow it without heavy charges.
Never borrow to trade leveraged forex or CFDs. Leverage means trading with borrowed exposure, and it can wipe out money fast. You would then still owe the loan instalments.
Frequently asked questions
Is DBR the same as debt-to-income ratio?
Yes. DBR (debt burden ratio) is the term Pakistani banks commonly use. The calculation is the same: monthly debt payments divided by monthly income.
What DBR will a bank accept?
Each lender sets its own limit. Ask the bank directly. A ratio comfortably within its limit improves your chances of approval.
Does my credit card count even if I pay it in full?
Lenders often count a minimum payment based on your card limit or balance. Ask how your lender treats it.
How much loan can I afford?
Use the mortgage calculator above with your own figures and a cautious interest rate. Then check that the instalment still leaves room for living costs and savings. For the basics of borrowing, see How Loans Work and Mortgage Basics.