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Debt-to-Income Ratio
(redirected from Debt-Income Ratio)

   Also found in: Wikipedia 0.01 sec.
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.


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Further, this debt-income ratio may likewise provide either a positive or negative rating which may consequently be one of the bases for mortgage approval.
Fannie Mae loans are structured in such a way that the borrower''s debt-income ratio does not exceed 28 percent.
A maximum debt-income ratio of less than 30 percent is required.
 
 
 
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