Debt-to-income ratio, without the jargon.
Debt-to-income ratio, or DTI, compares recurring monthly debt obligations with gross monthly income. It is one of the inputs lenders commonly use when evaluating how much debt a borrower can reasonably carry.
Monthly debt ÷ gross monthly income
If recurring monthly debt payments total $2,000 and gross monthly income is $8,000, the resulting DTI is 25%.
Mortgage underwriting can distinguish between housing-only obligations and total recurring debt. Exact treatment varies by lender, loan program, and borrower profile.
What may count
Mortgage or rent obligations, auto loans, student loans, credit-card minimum payments, alimony or support obligations, and other recurring debt may be considered depending on underwriting rules.
What usually does not work the same way
Utilities, groceries, subscriptions, and routine living expenses are important to your budget but are not necessarily treated as debt payments in a lender's DTI calculation.
Why DTI is not a budget
A lender's maximum approval is not the same thing as a comfortable monthly payment. Personal savings goals, childcare, transportation, repairs, and lifestyle costs still matter.