Debt-to-Income Ratio

(redirected from DTI Ratio)

Debt-to-Income Ratio

The amount of an individual or company's gross income that it spends on debt service as a percentage of its total gross income. The higher the DTI is, the less likely it is that the individual or company will be able to repay debt. As a result, financial institutions use the DTI in informing decisions on whether or not to make loans. Often, the "debt" in the term refers to all liability payments (such as employee wages, taxes, and utility bills) and not simply to debt.
References in periodicals archive ?
Creditors should bear in mind, however, that QMs generated under the temporary QM category that are eligible for purchase by Fannie Mae or Freddie Mac need not comply with the 43 percent DTI ratio, which will preclude a challenge on that basis for many loans.
A broader measure of debt burden is the overall DTI ratio, which includes mortgage and non-mortgage debt in the numerator.
any loan that meets the product feature requirement, and is eligible for purchase, guarantee or insurance by a GSE, FHA, VA or USDA, regardless of the DTI ratio (GSE qualification applies as long as the GSEs are in Federal Housing Finance Agency [FHFA] conservatorship, or until Jan.
Borrowers with an annual income of less than $80,000 must have a DTI ratio of less than, or equal to, 39%.
borrower's monthly DTI ratio or residual income; and
However, the back-end DTI ratio field was missing for this group.
Before modification, the median back-end DTI ratio was 79.
However, in this deal the back-end DTI ratio field was missing.
Under the two proposals, the determination of an affordable payment is almost identical, using a front-end DTI ratio without full consideration or verification of the borrower's total financial circumstances.
4) Change in DTI Ratio: Back-end DTI ratio data is generally more available than front-end data in the data files provided by mortgage issuers.
QM standards also include a 3 percent limit for points and fees; a maximum term of 30 years or less, and a cap of 43 percent on the back-end DTI ratio, among other requirements.