Debt-to-Income Ratio
Definition
- A ratio used to show how much of an individual's income goes toward debt repayments. The Debt-to-Income Ratio (DTI) can be used by lenders to determine an applicant's ability to repay a loan.
Synonyms
back-end ratio, front-end ratio
Related Terms and Acronyms
- Debt — Definition,
- Money one person or firm owes to another person or firm.
- Debt/Equity Ratio — Definition,
- A comparison of debt and equity used to measure the health of a business.
- Gross Debt Service (GDS) — Acronym, Very Important,
- The total monthly mortgage (or rent) payments, property taxes, utilities and maintenance fees as a percentage of gross monthly income.
➥ Used by mortgage lender underwriters to determine one's ability to qualify for a mortgage loan. - Income — Definition,
- The money earned in a specific time period.
- Loan — Definition,
- Letting another party use something of value temporarily.
- Mortgage (mtg) — Abbreviation, Important,
- A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
- Total Debt Service (TDS) — Acronym, Important,
- The ratio of a borrower's total monthly debt payments to his or her monthly gross income. Lenders use this ratio to determine how much of a loan a borrower is qualified for.
- Total Expense Ratio (TER) — Acronym,
- The percentage of monthly debt payments compared to total before-tax income.
