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
front-end ratio, back-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.
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