# Debt-to-Income Ratio (DTI)

*Borrowing & Credit — Finicade finance glossary*

Debt-to-income ratio is your total monthly debt payments divided by gross monthly income — the number that decides whether a mortgage lender says yes. Most conventional lenders cap it around 43%, with front-end housing costs alone under 28%. It uses gross income, so a 43% DTI is a much bigger share of your actual take-home pay than it sounds. Paying down a small loan with a large monthly payment can improve DTI more than paying down a larger balance.

**Formula:** `DTI = Total monthly debt payments ÷ Gross monthly income`

**Also known as:** DTI, debt to income, debt-to-income

**Related terms:** [Mortgage](https://finicade.com/glossary/mortgage), [Credit Score](https://finicade.com/glossary/credit-score), [Gross Income](https://finicade.com/glossary/gross-income), [Loan-to-Value Ratio (LTV)](https://finicade.com/glossary/loan-to-value-ratio), [Debt](https://finicade.com/glossary/debt)

Source: https://finicade.com/glossary/debt-to-income-ratio