debt to income ratio

Definition: Your debt-to-income ratio is the percentage of your income that goes toward paying your debt calculated as follows:
monthly debt spending / monthly income * 100

You can use your debt-to-income ratio to gauge whether you're spending too much money on debt. Many lenders, especially mortgage lenders, use your debt-to-income ratio when they're decided whether to give you a loan. If your debt-to-income ratio is too high, you'll be denied for the loan.

Also Known As: DTI ratio

Alternate Spellings: debt-to-income ratio