Debt-To-Income Ratio - DTI

Debt-To-Income Ratio - DTI

A personal-finance measure that compares an individual's debt payments to the income he or she generates. This measure is important in the lending industry as it gives lenders an idea of how likely they will receive payments from the borrower.

Notes:

The higher this ratio, the more burden there is on the individual to make payments on his or her debts. If the ratio is too high, the individual will have a hard time accessing any other forms of financing.

See also: Credit Rating, Credit Risk, Debt, Default Risk, House Poor, Mortgage