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 ?
From the view of the national economy, a better indicator may be the total debt to income ratio per person in which debt includes their mortgage payment.
The key variable of interest in our study is the increase in the debt to income ratio across counties from 2002 to 2006.
b) Cindy's debt to income ratio is less than 10%; this illustrates that Cindy's financial leverage is better than average financial leverage if an emergency should arise.
It should be noted that although the mortgage debt to income ratio increased just 7 percentage points for households earning less than $25,000, compared with 10 percentage points to 11 percentage points for households earning $25,000 to $100,000, homeownership rates are much lower among this segment of the population.
Labour does not support debt to income ratios for first home buyers.
Rising economic pressures continued to increase consumers' debt to income ratios during the review period.
Finally, CFSI said the fourth group, the Financially At Risk, also had unhealthily high debt to income ratios (48%), and 62% said they would only be able to make ends meet for a month or less in the case of a sudden loss in income.
The Bank is now pushing ahead with a desire to implement debt to income ratios, but the government has asked for more information.
With the new powers the FPC will be given tools to set limits on debt to income ratios and loan to value ratios for mortgages.
* Flexibility in underwriting criteria, including such items as debt to income ratios, payment reserves and limited credit histories
Household debt to income ratios are the highest they have ever been and wages are stagnant, with more than two-thirds of working people getting less than a 2 per cent pay increase last year.
The report also explores various indicators on the financial health of South African consumers themselves, including repeat borrowing activity, debt to income ratios and instalment to income ratios.