Debt-to-Income Ratio (DTI)

Intermediate 🏠 Real Estate

Definition

A lender's way of determining if you have too many bills relative to income, basically calculating how much of your paycheck goes to debt obligations.

Example Usage

Our debt-to-income ratio was 38%, just under the 43% threshold required for most mortgage qualification.

Origin

Modern lending practice formalized in 1980s-1990s

Fun Fact

Lenders typically cap DTI at 43%, meaning your total monthly debt payments can't exceed 43% of gross monthly income.

Source: Lending standards and practices

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