Debt-to-Income Ratio

Lenders look at a number of ratios and financial data to determine if the borrowers are able to repay the loan. One such ratio is the Debt-to-Income ratio. In this calculation, the lender compares the monthly payments, including the new mortgage, and compares it to monthly income. The income figure is divided into the expense figure, and the result is displayed as a percentage. The higher the percentage, the more riskier loan it is for the lender.