What does the acronym DTI stand for in mortgage lending?

In mortgage lending, the acronym DTI stands for Debt-to-Income ratio. This ratio is a financial measure that compares an individual’s total monthly debt payments to their gross monthly income. It is an important factor that lenders use to determine a borrower’s ability to manage monthly payments and repay debts. A lower DTI indicates that a borrower has a better balance between their income and debt obligations, which is often viewed favorably by lenders when assessing loan applications. The DTI helps ensure that borrowers are not over-leveraged and can comfortably afford their mortgage payments along with existing debts. Understanding DTI is crucial for both borrowers and lenders in the mortgage process.