Skip to main content  debt-to-income ratio  Definition from
Nolo’s Plain-English Law Dictionary  The percentage of a
person's monthly gross income that is spent on paying debts,
such as housing and credit card payments. Banks and lenders use
this ratio to decide how much money (and on what terms) they
will lend someone for a mortgage, car, or other loan.
Traditionally, lenders have said that your housing costs
(mortgage principal and interest, homeowner's insurance, and
property taxes, also known as PITI) shouldn't exceed 28% of your
gross income, and that your overall debt (PITI plus car and
other loan payments) shouldn't exceed 36%.  Definition provided
by Nolo’s Plain-English Law Dictionary.  August 19, 2010, 5:14
pm