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 ?
Reviewing debt-to-income ratios and other forms of alternative data are examples of these new tools as consumers with 'best' financial capacity profiles may be able to lean into the credit economy with more and better offers from wireless providers.
The bulletin, which was signed by Minister of Economy and Finance Aun Pornmoniroth, revealed that for last year all four key debt indicators - such as the debt-to-GDP and debt-to-income ratios - are well below their indicative thresholds.
Korean banks' mortgage underwriting is highly regulated in respect of loan-to-value and debt-to-income ratios. The regulatory limits applied to these measures can be more stringent depending on the location of the mortgage security or where borrowers have more than one mortgage.
There's also been a big increase in FHA loans with high debt-to-income ratios (DTIs) within the past several years.
Debt-to-asset and debt-to-income ratios were calculated and characterized as moderate-risk debt-to-asset ratio (0.5 to 0.9), high-risk debt-to-asset ratio (≥0.9), and high-risk debt-to-income ratio (>0.4)
Measures include an increased capital tax gain on house sales and stronger requirements for loan-to-value ratios and debt-to-income ratios in certain areas (including Seoul)," it said in its report.
In a statement, the central bank said, 'Real estate-induced systemic risks remain subdued in Austria, but close supervisory monitoring is warranted in light of the fact that a rising share of new housing loans to households shows relatively high loan-to-value, debt service-to-income and debt-to-income ratios.'
Debt-to-asset and debt-to-income ratios, as well as total debt, have been on the rise.
(3) Our results do not support this explanation of the debt-dependent fiscal multiplier: They show that individuals with higher pre-recession debt-to-income ratios actually reduce their debt by more than those with lower debt-to-income ratios.
Indeed, almost half of FHA borrowers have debt-to-income ratios above the QM limit of 43%.
The FPC set out new policies on home loans a year ago to insure against the risk of a steep rise in indebted households and has been given powers to limit residential mortgage lending at high loan-tovalue or high debt-to-income ratios.
They ban certain loan features such as negative amortization and interest-only payments; set a 43 percent ceiling for debt-to-income ratios; and impose a 3 percent limit on total loan fees, among other requirements.