GLOSSARY · DEBT & HOUSING
Debt-to-income ratio (DTI)
Your required monthly debt payments divided by your gross monthly income. Mortgage and loan underwriters use it to judge whether you can take on a new payment, and each lender sets its own limit.
Also called: DTI, debt to income
FORMULA
DTI = total monthly debt payments ÷ gross monthly income
COMPUTE IT WITH YOUR NUMBERS
LEARN IT PROPERLY
CHAPTER · UNDERSTANDING YOUR DEBT · FOUNDATIONSGood Debt and Bad Debt: Judging What a Loan BuysRELATED TERMS
SOURCES
- 12 CFR 1026.43, Minimum standards for transactions secured by a dwelling (ability to repay). Consumer Financial Protection Bureau.