DTI (Debt-to-Income Ratio)

Definition

Debt-to-Income ratio (DTI) is the percentage of your gross monthly income used for debt payments.

Formula

DTI = Total monthly debt payments ÷ Gross monthly income × 100

What usually counts as debt payments

• Mortgage or rent-related debt obligations
• Credit card minimum payments
• Auto loans
• Student loans
• Personal loans

Rule-of-thumb ranges

• Under 36%: generally strong
• 36% to 43%: often acceptable, depending on lender
• Above 43%: can make approval harder

Why it matters

Lenders use DTI to estimate how much additional debt you can handle. Lower DTI can improve approval odds and may lead to better borrowing terms.