Calculating your Debt-to-Income Ratio

A calculation used to qualify borrowers for unsecured personal loans is the debt-to-income ratio, or DTI. The ratio consists of debt divided by income.

Example: If an applicant pays $800 a month for his or her expenses, and their total monthly income is $1600, their DTI is 50%.

Lenders use the ratio to determine the borrower’s ability to meet additional monthly debt expenses —applicant’s with low DTIs are considered lower risk borrowers.