Debt-to-Income Ratio

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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 ?
According to the 1992 HMDA data, the two leading reasons for declined loan applications from African American and Hispanic customers were credit history and insufficient debt-to-income ratios.
The introduction and very active promotion of a new product -- called the Neighborhood Homebuyers Mortgage -- which requires only a 5 percent downpayment and allows applicants a higher debt-to-income ratio than that permitted by standard risk criteria.
Mortgage loans underwritten pursuant to the Expanded Underwriting Guidelines may have higher loan-to-value ratios (LTVs), higher loan amounts, higher debt-to-income ratios and different documentation requirements than those associated with the Standard Underwriting Guidelines.
If a borrower selects an IO to qualify for a larger loan, their debt-to-income ratio (DTI) will rise more than that of a non-IO product after the rate reset, all else being equal,' said Suzanne Mistretta, Senior Director, Fitch Ratings.
Mortgage loans underwritten pursuant to the expanded underwriting guidelines may have higher loan-to-value ratios, higher loan amounts, higher debt-to-income ratios, and different documentation requirements than those associated with the standard underwriting guidelines.
In addition to your debt-to-income ratio, lenders also look at your work and credit history.
That's especially true if you don't quite fit the mold -- you don't conform to all the underwriting mandates on credit, income, debt-to-income ratio and other criteria.
To calculate your debt-to-income ratio, divide your total recurring debt by your gross income.
The lending community has made strides to improve its services and products in large part by lowering credit standards and raising allowable debt-to-income ratios.
higher loan-to-value (LTV) and debt-to-income ratios;
These loans have even higher debt-to-income ratios than a typical high loan-to-value mortgage and a three-year subsidy buy-down that reduces the initial interest rate as much as 1.
Meanwhile, the debt-to-income ratio has nearly doubled, reaching a record of almost 1.