Category:
Financing
Debt-to-Income (DTI) Ratio is a financial term that compares a person’s recurring monthly debt payments (credit cars, car loans, etc.) to their gross monthly income.
Lenders use the DTI ratio to assess a person’s ability to manage the payments and repay the money they have borrowed.
It is generally calculated by dividing total recurring monthly debt by gross monthly income, and it is expressed as a percentage.
A lower DTI ratio is preferable as it shows you have a good balance between debt and income.