The depth to payments ratio or DTI is defined as the ratio of the total monthly bills to be paid to the monthly income of that particular person.
Explanation:
The DTI ratio can be calculated in four ways:
1. Make a note of all the payments you have to make every month and sum them up.
2. Calculate your income including your wages, dividends, freelance payments, and alimony.
3. Convert all the values to a monthly value.
For example: If your annual is $60000, the monthly income would be %5000. Carry on the same calculation for your debts also. Suppose your annual debt is $30000, then the monthly debts total is $2500.
4. Finally, divide the debt value by your income value and then multiply it by 100. We are multiplying by 100 to arrive at a percentage value.
For the above example your DTI will be $30000 divided by $60000 which equals to $0.5 x 100 = 50%
