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Debt-to-Income Ratio: Overview, Formula, Example

By Kristi WaterworthUpdated Jun 17, 2025 at 1:18 PM | Fact-checked by Frank Bass

Key Points

  • Debt-to-income ratio (DTI) helps assess financial health for loan applicants by evaluating debts against income.
  • A favorable DTI is typically between 30-45%; key for loan approvals, especially in mortgages.
  • Calculating DTI involves dividing total monthly debt by total monthly income to gauge financial stretch.

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