Debt-to-Income Ratio (DTI)
Your debt-to-income ratio compares your total monthly debt payments to your gross monthly income, expressed as a percentage. Lenders use DTI to judge whether you can afford another loan. Most mortgage lenders prefer a DTI of 43% or lower, and under 36% is considered healthy.
Example
If you earn $6,000 per month and pay $1,800 toward debts, your DTI is 30%.