debtservicetoincome
Debt service to income (DSTI) is a financial metric used in lending to assess a borrower’s ability to service monthly debt payments from their income. It expresses what portion of gross income is committed to debt obligations, helping lenders gauge repayment capacity.
Calculation and components: DSTI is typically calculated as total monthly debt payments divided by gross monthly
Interpretation: A lower DSTI indicates a smaller share of income is already committed to debt, suggesting greater
Usage and limitations: DSTI is used alongside other measures such as debt-to-income (DTI) ratios and, in housing