Debt-to-Income Ratio (DTI)
What is Debt-to-Income Ratio?
Your monthly debt payments divided by your gross monthly income.
Understanding Debt-to-Income Ratio
Lenders use DTI to judge whether you can afford a new loan. It includes payments on mortgages or rent-like housing debt, car loans, student loans, and minimum credit card payments.
Many lenders look for a DTI of 36% or lower, though some loan programs allow higher ratios.
Formula
Example
$1,800 of monthly debt payments on a $6,000 gross monthly income gives a DTI of 30%.