Quick answer: Debt-to-income ratio compares monthly debt payments with monthly income. Lenders may use it to evaluate whether another payment appears affordable.
How DTI is calculated
DTI is commonly estimated as monthly debt payments divided by gross monthly income, then multiplied by 100. Different lenders may calculate or interpret it differently.
| Example input | Amount |
|---|---|
| Monthly debt payments | $1,200 |
| Gross monthly income | $4,000 |
| Example DTI | 30% |
Why it matters
A high DTI can suggest less room for a new payment. A lower DTI does not guarantee approval, but it can be part of a stronger affordability picture.
What to include
Include recurring debt payments such as credit cards, auto loans, student loans, and housing obligations where relevant.
Methodology
This page is educational and uses illustrative examples. Borrow Your Loan does not publish unverified partner rates, approval odds, or lender requirements. A lender or partner controls any final offer, APR, fee, amount, repayment term, and funding decision.
Sources and consumer references
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