Debt-to-Income (DTI) Ratio

Debt-to-Income Ratio (DTI) is an important financial metric that lenders use to evaluate a borrower’s ability to manage additional debt. It is dividing the borrower’s total monthly debt payments by their gross monthly income. This ratio provides lenders with an indication of how much of the borrower’s income is already allocated towards obligations DTI ratio indicates that the borrower has more disposable income and is less to default on theirs. Lenders typically have specific requirements for loan approvals, with lower ratios being more favorable