Debt-to-income ratio
Your total monthly debt payments divided by your gross monthly income, shown as a percentage. Lenders use it to judge whether you can take on a new payment.
To find it, add up your required monthly payments on loans and credit cards, plus any child support or alimony you pay, and divide by your income before taxes. Living costs like utilities and groceries don't count.
Each lender sets its own limit. For mortgages, lenders count the new housing payment too. A lower ratio makes approval easier and leaves more room in your budget.
Example
$380 car loan + $220 student loan + $100 card minimum = $700. $700 ÷ $5,500 gross monthly income = 12.7% DTI.