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Complete glossary lessonNational exam concept

Debt-to-income ratio

Debt-to-income ratio, or DTI, compares required monthly debt payments with gross monthly income.

Official area

Financing

Knowledge cluster

Mortgage finance

Learning sequence

Define, distinguish, apply, retrieve

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Exam purpose

Recognize the rule, then reject the nearest look-alike.

Georgia lens

Apply the state distinction only when the facts call for it.

Connected terms

Connected to 4 terms and one official content area.

What does Debt-to-income ratio mean in real estate?

Debt-to-income ratio, or DTI, compares required monthly debt payments with gross monthly income. A housing ratio uses the housing obligation, while a total DTI includes housing plus other counted recurring debt.

How is Debt-to-income ratio different from the closest exam answer?

DTI measures payment burden relative to income. LTV measures loan size relative to property value.

What is the Georgia-specific rule?

This national underwriting concept is unchanged in Georgia. Use gross income and only the debts the question directs, all on the same monthly basis.

Worked exam example

Scenario

Gross monthly income is $8,000, housing expense is $2,000, and other monthly debt is $800. Total DTI is $2,800 ÷ $8,000 = 35 percent.

Decision rule

DTI measures payment burden relative to income. LTV measures loan size relative to property value.

What is the most common exam trap?

Trap correction

Using net take-home pay or excluding the proposed housing payment changes the ratio.

Memory cue: Using net take-home pay or excluding the proposed housing payment changes the ratio.

Original exam check

Apply the definition

Which statement correctly explains Debt-to-income ratio?

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Related terms to learn next

Loan-to-value ratio

Loan-to-value ratio, or LTV, expresses the loan amount as a percentage of the lender's value base.

PITI

PITI stands for principal, interest, taxes, and insurance, the four common components included when estimating a borrower's total monthly housing payment.

Private mortgage insurance (PMI)

Private mortgage insurance protects a conventional mortgage lender against part of the loss if a borrower defaults.

Loan origination fee

A loan origination fee is a charge for the lender's work in making, processing, or underwriting a loan.

Recommended next complete lesson

Continue with Financing complete lesson. It places this term inside the full rule, worked examples, exam traps, and mixed practice required for mastery.
Previous termLoan origination feeNext term Effective gross income

Debt-to-income ratio quick answers

Facts checked against the current PSI Candidate Information Bulletin and GREC sources. Editorial standards.

What is Debt-to-income ratio?

Debt-to-income ratio, or DTI, compares required monthly debt payments with gross monthly income.

What is Debt-to-income ratio commonly confused with?

DTI measures payment burden relative to income. LTV measures loan size relative to property value.

How does Georgia treat Debt-to-income ratio?

This national underwriting concept is unchanged in Georgia. Use gross income and only the debts the question directs, all on the same monthly basis.