Debt-to-Income Ratio _DTI_ Law and Legal Definition
Debt-To-Income Ratio _DTI_ is a method used to measure an individual's monthly income used for payment of debt. DTI is the percentage of gross income used to pay debt. There are two types of DTIs. They are: Front-end ratio and back-end ratio. The Front-end ratio shows the percentage of income used for housing. And the Back-end-ratio shows recurring debt payments. The total monthly debt includes expenses such as mortgage payments, credit-card payments, child support, and other loan payments. Lenders use this ratio to approve mortgages. Generally, the higher the ratio, the higher is the apparent risk.
