reference
glossary.
25 terms
definition
A financial metric that compares a borrower's total monthly debt payments to their gross monthly income, expressed as a percentage. Lenders use this ratio to assess a borrower's ability to manage monthly payments and repay debts. Most conventional mortgages require a debt-to-income ratio below 43%.
examples
- —Sarah's debt-to-income ratio of 35% helped her qualify for a favorable mortgage rate.
- —The lender required additional documentation because the applicant's debt-to-income ratio exceeded 40%.
- —By paying off credit card debt, John lowered his debt-to-income ratio from 45% to 38%.