A debt-to-income ratio (DTI) is a measure of the amount of debt you have to your overall income (before taxes and other deductions). Lenders, use your debt-to-income ratio to measure your ability to responsibly manage your monthly payments and repay the money you have borrowed.

To calculate the debt-to-income ratio, add up your total recurring monthly debt (such as mortgage loans, personal loans, auto loans, credit card payments and consumer loans) and then divide by your gross monthly income (the amount you earn each month before taxes and other deductions).

Example:
Let’s assume you pay N101,200 for your mortgage, N24,000 for your car and N5,400 for the rest of your debts each month. Your monthly debt payments would be N130,600 (N101,200 + N24,000 + 5,400 = N130,600).

And the gross monthly income is N250,000, your debt-to-income ratio would be 52.2% (N130,600 / N250,000 = 0.52).
If your gross monthly income was higher, i.e. N350,000, your debt-to-income ratio would be 37.31% (N130,600 / N350,000 = 0.37).

A low debt-to-income ratio shows a good sense of balance between debt and income. Lenders favor lower ratio because, from industry experience and research, borrowers with a lower debt-to-income ratio are more likely to successfully manage monthly debt payments.

On the contrary, a high debt-to-income ratio indicates that you may have too much debt for your level of income, and lenders view this as a pointer that you won’t be able to take on any additional debt.

“Less debt equals more borrowing power”

In most cases, 43% is the highest debt-to-income ratio a borrower can have and still get a qualified mortgage. A debt-to-income ratio smaller than 36%, however, is preferable, with no more than 28% of that debt going towards servicing your mortgage. In general, the lower the number, the better the chance you will be able to get the loan or line of credit you want.
However, there are exceptions, for instance, a lender must consider your debt-to-income ratio, but is allowed to offer additional debt with a debt-to-income ratio higher than 43%. Such Lenders with sufficient capital asset can make reasonable, good-faith effort, following the Central Banks’s rules, to determine that such have the ability to repay the loan.

curlled from >>>> http://moneyfarmcapital..com/2015/08/what-is-good-debt-to-income-dti-ratio.html

Owe no man....please!


...but on a contradictory but intelligent disposition...


...work with maximum limit of 35% to cater for eventualities. This is Africa, responsibilities are too many.