Debt-to-Income Ratio (DTI)

An individual’s debt-to-income ratio (DTI) is a widely used consumer lending metric to determine a person’s credit risk and the maximum amount of the loan. It is a measure of an individual or a household’s total debt (monthly outgoings to cover borrowings) against gross (pre-tax) income. It gauges the ability to repay debt. Lenders may reduce interest rates for borrowers with low debt-to-income ratio.