Debt-to-Income Ratio

(redirected from Debt to Income Ratios)

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 ?
In our 2005 holiday forecast, we expressed concern that consumers could not sustain current debt to income ratios.
The new energy awareness mortgage encourages home energy conservation with expanded debt to income ratios, a 50% reduction in origination fees, and 100% financing for qualifying members.
Certain economic factors are currently contributing to increased market activity: high consumer debt to income ratios, low savings rate, the threat of inflation and increasing defaults on interest only, or ARM loans.
Fitch also studied the effect of the payment increase on the IO borrowers' debt to income ratios (DTIs) and found that the IO borrower's DTI rises by a larger percentage compared to a hybrid ARM borrower's DTI, all else being equal.
3% of the mortgage loans included in the trust were acquired under Residential Funding's AlterNet program, which was established primarily for the purchase of mortgage loans made to borrowers that may have imperfect credit histories, higher debt to income ratios or mortgage loans that present certain other risks to investors.
When a property seller or a nonprofit has paid a homebuyer's consumer debts in order to meet debt to income ratios, the mortgage credit approval of such a borrower would not be considered by FHA to be acceptable underwriting.
Not only does this practice prevent lenders from accurately analyzing a borrower's debt to income ratio, but it inevitably leads buyers to assume and accept higher risk and higher interest rate loans that they cannot manage on a monthly basis.
Adjusted for the lower level of homeownership rates among this income group, mortgage debt to income ratios increased more for these lower income groups than for the $50,000 to $100,000 income group.
The AlterNet program was established primarily for the purchase of mortgage loans made to borrowers that may have imperfect credit histories, higher debt to income ratios or mortgage loans that present certain other risks to investors.
By using this pool, exceptions may be made to applicants' debt to income ratios, employment history requirements, source of income definitions and other criteria.