Finance
A borrower's debt-to-income (DTI) ratio is calculated by dividing:
ATotal assets by total debts
BMonthly debt payments by gross monthly income✓ Correct
CNet monthly income by monthly housing payment
DAnnual income by the loan amount
Explanation
DTI = Total Monthly Debt Payments ÷ Gross Monthly Income. Lenders use this ratio to assess a borrower's ability to manage monthly payments. Most conventional loans require a DTI of 43% or less.
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