Debt-to-Income Ratio (DTI) — Financial Glossary
Definition: The percentage of your gross monthly income that goes toward paying debts, used by lenders to assess borrowing capacity.
What is DTI?
Debt-to-income ratio (DTI) compares your total monthly debt payments to your gross monthly income. Lenders use it to determine how much additional debt you can handle.
How to calculate DTI
DTI = (Total Monthly Debt Payments / Gross Monthly Income) × 100
Example
If your monthly debts total $2,000 and your gross monthly income is $6,000:
DTI = ($2,000 / $6,000) × 100 = 33%
What lenders look for
| DTI | Assessment |
|---|---|
| Below 36% | Good — most lenders prefer this |
| 36–43% | Acceptable for most mortgages |
| 43–50% | May qualify for FHA loans |
| Above 50% | Difficult to qualify for most loans |