Finance
The debt-to-income (DTI) ratio used by mortgage lenders compares:
AThe property's debt to its market value
BThe borrower's total monthly debt payments to their gross monthly income✓ Correct
CThe loan amount to the property's appraised value
DThe borrower's net worth to their monthly income
Explanation
DTI ratio = Total Monthly Debt Payments ÷ Gross Monthly Income. Lenders use DTI to assess a borrower's ability to manage monthly payments. Most conventional loans require a back-end DTI (all debt including the proposed mortgage) of no more than 43-45%.
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