The Debt-To-Income Ratio (DTI) is a key metric used by lenders to determine a borrower's ability to repay a loan. The back-end ratio compares monthly debt payments to gross monthly income. A higher back-end ratio indicates that a greater percentage of income is being used to cover debts, which may be an indicator of financial distress.There are several factors that can influence the back-end ratio, including the size of the mortgage, interest rates, and the amount of other debt obligations. In addition, changes in income or expenses can also impact this calculation. For example, if someone loses their job or experiences a significant increase in their monthly expenses, their back-end ratio will likely increase.“While there isn't necessarily anything wrong with having a high debt load relative to one's income, it's important to be aware of this metric and its implications. A high back-end ratio could make it difficult for someone to afford other major life expenses such as housing and food."The debt-to-income ratio is a number borrowers should never go above – this calculation will help you keep your DTI in check.To better understand how the debt-to-income ratio works, let's take a look at this example. Let's say you make $5,000 per month after taxes and have one car payment of $1,500 per month with no other expenses.
