Lenders use debt-to-income ratio (DTI) as a quick measure of whether your recurring debt payments fit within your income. DTI is expressed as a percent: total recurring monthly debt payments divided by gross monthly income. It’s different from savings rate or net income — DTI is a shorthand for lenders to estimate repayment capacity, and common underwriting guidelines flag higher DTIs as greater risk. When you prepare a loan application or plan your budget, calculating DTI helps you see whether a new monthly payment fits comfortably. For this example, we’ll use common monthly obligations — rent or mortgage, car payment, minimum credit-card payments, and student loan obligations — and compare the total to gross monthly pay to show the simple arithmetic lenders perform during prequalification.