Debt-to-Income Ratio (DTI)

Debt-to-income ratio compares your total monthly debt payments to your gross monthly income, expressed as a percentage. Lenders rely on it heavily — especially for mortgages — as a gauge of whether you can take on more debt; lower is better, and many lenders look for a DTI comfortably under about 36 to 43%.

Beyond borrowing, DTI is a useful personal health check. A high ratio signals that debt payments are crowding out saving and flexibility; bringing it down — by paying off balances or raising income — frees up cash flow for investing and reduces financial fragility.