Debt-to-Income Ratio

(redirected from Debt to Income)
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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 ?
In calculating the debt to income ratio, monthly payments on mortgage, rent, utilities or taxes should not be counted as debt, while income should be after-tax net spendable income.
The second group, the Financially Tenuous, also has what CFSI calls an unhealthy ratio of debt to income (41%), but does not plan for future, irregular large purchases.
The outstanding student-debt-to-income ratio nearly doubled for the richest fifth of households from 2007 to 2010, but it remains the case that in both years the ratio of student debt to income was markedly higher for the lowest fifth of households by income," the study reported.
household debt to income ratio during the years prior to the recession.
Using the debt to income ratio (with the increased credit card payments), which statement is correct?
In this case, income is growing faster than debt so the ratio of debt to income will always be less than unity.
Initial results indicate the middle age group holds not only the highest amount of assets, but also the highest debt to income ratio.
taking into account this higher level of assets, all in all, the household sector seems to be in reasonably good financial shape with only modest evidence of an increased level of household financial strain." However, he cautioned that "ratios of household debt to income appear to imply somewhat more stress than is likely to be the case ...
"The ratio of debt to income is at unprecedented heights, which are only sustainable if interest rates remain unusually low."
The ratio of household debt to income has soared from less than 100% in 1997 to around 135% now, with mortgage lending by banks growing by 10% a quarter and unsecured lending in the form of credit cards, loans and overdrafts by 13% a quarter over the past year.
This compared with a debt to income ratio, also known as a debt stress level, of 13.05 for women and 13.66 for couples.
For example, households with incomes between $50,000 and $100,000 increased their rates of aggregate mortgage debt to aggregate income by about one-sixth and their corresponding consumer debt to income ratio by roughly 50 percent.