What is a healthy debt-to-income ratio?
Debt-to-income ratio = total monthly debt repayments ÷ gross monthly income. A household paying R8,000 a month towards debt on a gross income of R24,000 has a ratio of one third — one rand in every three already spoken for before the month begins.
The most widely used caution line sits around a third. Below it, lenders generally see room to absorb a surprise; at or beyond it, affordability is commonly treated as strained. It's a convention from lending practice, not a law.
What the ratio measures
Add up every monthly debt repayment — bond, car finance, personal loans, store accounts, and the minimum repayments on credit cards and overdrafts. Divide that total by your gross monthly income. The answer is the share of your earnings that's committed to debt before anything else gets paid.
What it deliberately leaves out is everything else: groceries, school fees, electricity. It's a debt lens, not a full budget — which is why lenders use it alongside other checks rather than instead of them.
How lenders use it
The National Credit Act requires every credit provider to run an affordability assessment before granting credit: income, existing debt obligations and realistic living expenses all have to be considered. Granting credit without doing that properly can amount to reckless lending — a term the Act attaches real consequences to.
A debt-to-income ratio is one of the quickest lenses inside that assessment. A high ratio says the next repayment would have to squeeze into a month that's already committed — and each provider draws its own line on how much squeeze it will lend into.
The one-third convention
Across banks and affordability guides, the most widely used caution line sits around a third: when total monthly repayments reach roughly a third of gross income, affordability is commonly treated as strained. Below that line there's generally room to absorb an interest-rate hike or a broken geyser; at or beyond it, one surprise can tip the month over.
It's worth being precise about what that line is: a convention from lending practice, not a rule or a guarantee. Conventions also differ on whether the home loan is counted in the total — which is why the same household can hear different verdicts from different sources.
What moves the ratio
The ratio has exactly two moving parts — the repayments on top and the income underneath — and everything that changes it changes one of them.
- New credit — every account opened adds a repayment to the top of the fraction
- Interest-rate changes — repayments on prime-linked debt rise and fall without any new borrowing at all
- Settling an account — that repayment falls away entirely, and the ratio drops in one step
- Income changes — an increase lowers the ratio even if the debt stands perfectly still
- Consolidation — can lower the monthly repayment while stretching the term, so the ratio improves even where the total interest paid over the life of the debt does not
When the number is already heavy
A ratio is information, not judgement. Where repayments have grown past what the income can carry, the National Credit Act provides a formal process for restructuring them — this library covers it in "How does debt review work in South Africa?"
Terms used on this page
- minimum repayment
- The smallest amount a credit agreement requires you to pay each month to stay in good standing.
- gross income
- Income before tax and deductions come off — the number on the offer letter, not the amount that lands in the bank.
Reviewed July 2026