What DTI measures
A debt-to-income ratio expresses specified monthly debt payments as a percentage of specified monthly income. The exact debts and income definitions used can differ by lender and product.
Why it matters
DTI gives lenders one way to assess how much of a borrower's income is already committed to debt. Borrowers can also use it as a budgeting signal when considering new obligations.
DTI is not the whole picture
A ratio alone does not capture savings, variable expenses, financial goals, job stability or every underwriting requirement. A loan can fit a lender's criteria and still feel uncomfortable in a household budget.
Improving the ratio
Reducing recurring debt obligations or increasing qualifying income can lower the mathematical ratio, but financial decisions should be evaluated in their broader context rather than solely to target one metric.
Calculate a scenario with the Debt-to-Income Calculator.
Lenders may calculate and interpret DTI differently. This is general educational information.