Warning

Info

Warning

Info

Warning

Info

LSDefine

Simple English definitions for legal terms

debt-to-income ratio

Read a random definition: hundredary

A quick definition of debt-to-income ratio:

The debt-to-income ratio is a way to measure how much money a person or organization makes compared to how much they owe. It helps lenders decide if someone can handle making monthly payments to pay back a loan. To calculate it, you add up all your monthly debt payments (like a mortgage, car loan, and credit card balance) and divide that by your gross monthly income. Lenders usually want this number to be under 36%, but you can still get a loan with a ratio up to 43% if you meet certain standards.

A more thorough explanation:

The debt-to-income (DTI) ratio is a measure of how much income a person or organization generates to service their debt. It is calculated by dividing all monthly debt payments by gross monthly income. Lenders use this ratio to determine if a borrower can manage monthly payments to repay borrowed money.

For example, if a person pays $2,000 a month for a mortgage, $300 a month for an auto loan, and $700 a month for credit card balances, their total monthly debt is $3,000. If their gross monthly income is $7,000, their debt-to-income ratio is 42.8% ($3,000 divided by $7,000).

Traditionally, lenders have set guidelines that a borrower's housing costs (mortgage principal and interest, homeowner's insurance, and property taxes) should not exceed 28% of their gross income, and their overall debt (housing costs plus car and other loan payments) should not exceed 36%.

Most lenders prefer a debt-to-income ratio of under 36%, but a borrower can still qualify for a mortgage with a ratio as high as 43% if they meet certain standards.

Overall, a lower debt-to-income ratio indicates that a borrower has more income available to pay off their debts, making them a more attractive candidate for lenders.

debt-management plan (DMP) | debtor

Warning

Info

General

General chat about the legal profession.
main_chatroom
👍 Chat vibe: 0 👎
Help us make LSD better!
Tell us what's important to you
MIAMI A
[] AromaticTroubledDormouse
20:55
How does one know if they are UR1 or UR2?
[] AromaticTroubledDormouse
20:56
CONGRATS MACAQUE!
TY
got a random stanford email and almost had a heart attack
ALSO CONGRATS!
Congrats1!
21:15
Miami A, yall I'm so excited I could cry.
21:15
Feel like I can finally stop holding my breath!! Whew!!!
[] baddestbunny
22:16
every time I get accosted by a strange man who follows me around because my male coworkers were too busy talking to walk me back to my car I get closer to saying we need to bring back traditional gender roles
Dkk
22:32
Nice! @Macaque
Dkk
22:32
@Aromatic, Have to guess.
Dkk
22:33
That sucks @Bunny do you have to go to the hospital?
[] baddestbunny
22:40
I said accosted not assaulted
23:35
guys. my notre dame address just went long is this good or bad
1a2b3c4d26z
23:37
Oooooo me too
23:37
omg is this good or bad
Dkk
23:47
Idk if gender roles are gunna fix that then.
23:49
it looks like most people who applied in october last cycle didn't get a decision until january... does it even mean anything that our addresses went long??
hows ED 2 compared to ED 1?
Dkk
0:10
No idea
windyMagician
0:34
reporting live to say my ndls address also went long
does it mean anything ^
Dkk
2:21
NDLS and Fordham took a very long time last year. It's good info for people to know.
[] baddestbunny
4:29
let’s get after it boys and girls
Dkk
5:21
I gtg to bed soon.
Dkk
5:22
Big day today. Gunna be a crazy one. I will sleep through the first half.
good morning lsd it is 5 am EST
also jazzy my ndls address went long ages ago i sadly do not think it means anything
my stanford address also went long LOL i think at most it's an indicator it's under review
LSD+ is ad-free, with DMs, discounts, case briefs & more.