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 ?
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.
An increase in debt-to-income ratios suggests mortgage credit is loosening.
Impac allows them to document their income using 12 months of recent bank statements and to have debt-to-income ratios as high as 50 percent.
Generally speaking, banks prefer debt-to-income ratios no higher than the low 30% range.
NHS presently is receiving funds from the New York Mortgage Coalition, a group of 12 banks that has lowered down-payments to 5 percent, reduced points and application fees, expanded debt-to-income ratios from the conventional 28 percent/36 percent to 33 percent/38 perc.
Students have the right to choose the education and career path that they will pursue, and not have it restricted by arbitrary debt-to-income ratios.
Since 1990, the S&P 500 Index has appreciated nearly 3 1/2 times (4 1/2 times at its peak in late 2000), while average housing prices have almost doubled and continue to accelerate, in a recent speech, Federal Reserve Chairman Alan Greenspan said, "Despite the recent high debt-to-income ratios .
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.
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.
The research also found that despite people on low incomes having the highest debt-to-income ratios, higher earners tended to have higher levels of debt, with people earning more than pounds 2500 a month after tax having average debts of pounds 45,000.
Sub-prime mortgage loans are generally made to borrowers who do not qualify for financing under conventional underwriting criteria due to prior credit difficulties and/or the inability to satisfy conventional documentation standards, and/or conventional debt-to-income ratios.
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.