DTI - Debt to Income

The definition of mortgage term: Debt to Income

The ratio of the borrowers gross income to the debt owed. The expense amount is divided by the income amount. This results in a percentage. There are two types of DTI. the first is known as the front-end ratio. This indicates the percentage of income that is going towards housing expense's, such as PITI. The second type is known as the back-end ratio. This determines what percentage of income is used to pay debts. The higher the percentage, regardless of the type of DTI used, the riskier the loan is for the lender.

 

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