Debt-to-Income Ratio

Debt-to-income ratio (DTI) compares your total monthly debt payments to your gross monthly income, expressed as a percentage. It's a key metric lenders use to evaluate your borrowing capacity.

Why it matters

Lenders use DTI as a gatekeeper: most mortgage lenders want to see a DTI below 36%, and anything above 43% makes approval unlikely for conventional loans. Beyond lending, your DTI tells you how much of each paycheck is already spoken for before you even think about groceries, gas, or savings.

Example

If you earn $6,000/month gross and pay $1,200 in rent, $350 in student loans, and $200 in car payments, your DTI is 29% ($1,750 / $6,000).

How Ray helps

Ray identifies recurring debt payments in your transactions and calculates your DTI automatically. Run to see the percentage and get a breakdown of which debts are consuming the most income.

Terminal

$ ray "what is my debt-to-income ratio?"

Related terms

Gross Income - Gross income is the total amount you earn before any deductions — taxes, insurance premiums, retirement contributions, and other withholdings.

Net Income - Net income is your take-home pay after all deductions — federal and state taxes, Social Security, Medicare, health insurance premiums, and retirement contributions.

Mortgage - A mortgage is a loan used to purchase real estate, where the property itself serves as collateral.

Credit Score - A credit score is a three-digit number (typically 300-850) that represents your creditworthiness based on your borrowing and repayment history.

Amortization - Amortization is the process of paying off a loan through regular installments that cover both principal and interest.

Try Ray free

Open source, local-first, and takes five minutes to set up.

$npm install -g ray-finance View on GitHub