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Debt-to-Income Ratio (DTI)

Definition - What does Debt-to-Income Ratio (DTI) mean?

Debt-to-income ratio is a simple method of calculating an individual's monthly income that is consumed in paying his or her debts. These payments may include credit card or housing payments. Debt-to-income ratio is also known as DTI.

Justipedia explains Debt-to-Income Ratio (DTI)

This ratio is particularly useful for banks and other lending institutions when it comes to deciding how much an individual can afford to borrow. Traditionally, lenders say that an individual's overall debt burden should not exceed 36% of his or her gross income.

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