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GLOSSARY

Canadian Financial, Real Estate and Mortgage Glossary

How often this word is used
 
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50% - Moderately

Debt-to-Income Ratio


Synonyms:back-end ratio, front-end ratio
Filed Under: financial-banking, mortgages
Tags: banking, debt, mortgage
 

Definition of debt-to-income ratio

debt-to-income ratio
1. A ratio used to show how much of an individual's income goes toward debt repayments. The Debt-to-Income Ratio (DTI) can be used by lenders to determine an applicant's ability to repay a loan.

Related Terms and Acronyms:

  • debt   Money one person or firm owes to another person or firm.
  • debt/equity ratio   A comparison of debt and equity used to measure the health of a business.
  • gross debt service (GDS)   The total monthly mortgage (or rent) payments, property taxes, utilities and maintenance fees as a percentage of gross monthly income.
      ➥  Used by mortgage lender underwriters to determine one's ability to qualify for a mortgage loan.
  • income   The money earned in a specific time period.
  • loan   Letting another party use something of value temporarily.
  • mortgage (mtg)   A mortgage is a contract stipulating a specific real property, typically a residence or building, as collateral for a loan. The mortgage incurs a rate of interest that varies according to term and other features.
  • total debt service (TDS)   The ratio of a borrower's total monthly debt payments to his or her monthly gross income. Lenders use this ratio to determine how much of a loan a borrower is qualified for.
  • total expense ratio (TER)   The percentage of monthly debt payments compared to total before-tax income.

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