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Finance
Debt-to-Income Ratio
The percentage of your monthly income that goes toward paying debts.
Lenders love a low debt-to-income ratio (usually under 36%) because it shows you can afford new loans. Mortgage companies especially watch this number.It's like checking how much of your allowance is already promised to friends before you decide what else you can buy.
Real world: If you earn $4,000 a month and pay $1,200 toward loans and credit cards, your debt-to-income ratio is 30%.
💡 Keep your debt-to-income ratio low — it opens doors to better loans and lower interest rates.