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Wednesday, April 13, 2011

Debt to Income Ratio Example

Definition: Debt to Income (DTI) Ratio is used to calculate the percentage of a consumer's monthly income that goes toward paying debts, which can include certain taxes, fees, insurance premiums, car loans, credit card payments, etc.

Formula:

Debt to Income = Monthly fixed expenses / Gross monthly income

Example 1:
If you have Yearly Gross Income of $24,000 and Monthly liabilities of $200.

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