debt-to-income ratio

debt-to-income ratio
The percentage of a person's monthly gross income that is spent on paying debts, such as housing and credit card payments. Banks and lenders use this ratio to decide how much money (and on what terms) they will lend someone for a mortgage, car, or other loan. Traditionally, lenders have said that your housing costs (mortgage principal and interest, homeowner's insurance, and property taxes, also known as PITI) shouldn't exceed 28% of your gross income, and that your overall debt (PITI plus car and other loan payments) shouldn't exceed 36%.
Category: Real Estate & Rental Property → Buying a House
Category: Real Estate & Rental Property → Selling a House

Nolo’s Plain-English Law Dictionary. . 2009.

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