The debt-to-income ratio (DTI) is a financial measure that compares a person’s monthly debt obligations to their gross monthly income.
It shows what portion of income is used to pay debts such as rent or mortgage, credit card minimum payments, car loans, student loans, and other recurring financial commitments. Lenders often use this ratio to assess a borrower’s ability to manage additional debt and make repayments on time. A lower DTI indicates healthier financial balance and greater borrowing capacity, while a higher ratio may suggest financial strain.
Understanding your DTI is important when applying for loans or managing your overall financial well-being.