Debt-To-Income Ratio - DTI

Dictionary Says

Definition of 'Debt-To-Income Ratio - DTI'

A personal finance measure that compares an individual's debt payments to the income he or she generates. This measure is important in the lending industry as it gives lenders an idea of how likely it is that the borrower will repay the loan.
Investopedia Says

Investopedia explains 'Debt-To-Income Ratio - DTI'

The higher this ratio, the more burden there is on the individual to make payments on his or her debts. If the ratio is too high, the individual will have a hard time accessing other forms of financing.

Related Definitions

  • Front-End Debt-to-Income Ratio - DTI

    A variation of the debt-to-income ratio (DTI) that calculates how much of a person's gross income is going towards housing costs. If a homeowner has a mortgage, the front-end DTI ratio ...
    Read More »
  • Recurring Debt

    Any payment used to service a debt obligation that occurs on a continuing basis. Recurring debt involves payments that cannot be easily canceled at the payer's request, including alimony ...
    Read More »
  • House Poor

    A situation that describes a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance and utilities. ...
    Read More »
    • Credit Rating

      An assessment of the credit worthiness of individuals and corporations. It is based upon the history of borrowing and repayment, as well as the availability of assets and extent of ...
      Read More »
    • Credit Risk

      The risk of loss of principal or loss of a financial reward stemming from a borrower's failure to repay a loan or otherwise meet a contractual obligation. Credit risk arises whenever a ...
      Read More »
    • Default Risk

      The event in which companies or individuals will be unable to make the required payments on their debt obligations. Lenders and investors are exposed to default risk in virtually all ...
      Read More »
    • Total Debt Service Ratio - TDS

      A debt service measure that financial lenders use as a rule of thumb to give a preliminary assessment of whether a potential borrower is already in too much debt. More specifically, this ...
      Read More »
    • Gross Debt Service Ratio - GDS

      A debt service measure that financial lenders use as a rule of thumb to give a preliminary assessment about whether a potential borrower is already in too much debt. Receiving a ratio of ...
      Read More »
    • Combined Loan To Value Ratio - CLTV Ratio

      A ratio used by lenders to determine the risk of default by prospective homebuyers when more than one loan is used. In general, lenders are willing to lend at CLTV ratios of 80% and ...
      Read More »
    • Household Income

      The combined gross income of all the members of a household who are 15 years old and older. Individuals do not have to be related in any way to be considered members of the same ...
      Read More »

Articles Of Interest

Partner Links