Two Main Kinds of DTI
The two main kinds of DTI are expressed as a pair using the notation x/y (for example, 28/36).
- The first DTI, known as the front-end ratio, indicates the percentage of income that goes toward housing costs, which for renters is the rent amount and for homeowners is PITI (mortgage principal and interest, mortgage insurance premium, hazard insurance premium, property taxes, and homeowners' association dues ).
- The second DTI, known as the back-end ratio, indicates the percentage of income that goes toward paying all recurring debt payments, including those covered by the first DTI, and other debts such as credit card payments, car loan payments, student loan payments, child support payments, alimony payments, and legal judgments.
Read more about this topic: Debt-to-income Ratio
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