How Much Debt Should a Church Have?

Personally, I think church debt should be exactly like your homeowner’s debt: that ratio should never exceed 2 to 1. Yes, a bank will loan you 3 to 1 but you’ll be so strapped financially that you won’t have any disposable cash for doing anything else.

The ratio to the operating budget, my suggestion is 10% or less. Basic economics for a church with no debt:

  • building is about 20%
  • programming (including missions) is about 30%
  • staffing is about 50%

To pay your loan, you’ve got to take it out of one or all three of these. Most of your building costs are fixed (energy and maintenance). That leaves programming and staffing – if you cut those too much, you’ll have a great building with no one to lead and no one to follow.


Better to have programming at 25% and staffing at 45% with some growth than to cut to the bone at 20% programming and 40% staffing (which will kill your staff, too). You can grow out of debt, but that takes a lot of intentionality – that is hard when most pastors are trying to manage what they already have and can’t imagine taking on more in order to grow giving and attendance even more than they are already doing.
I’ve worked with some churches that have a 3 to 1 ratio (debt to annual budget), but they are hurting financially. And, their new building will be old and worn down long before the debt is paid off at their current rate. The appearance won’t attract new people, especially a younger generation.

My recommendation, get out of debt as soon as feasibly and fiscally possible. Debt is fine so long as it doesn’t become the boa constrictor that wraps around the church and kills it.

Lead On!