Debt-to-Income (DTI) Ratio

The Debt-to-Income (DTI) ratio measures an individual’s or business’s total monthly debt payments relative to their monthly income. It’s commonly used by lenders to assess creditworthiness.

Formula:

DTI = (Total Monthly Debt Payments / Gross Monthly Income) × 100

Interpretation:

  • Lower DTI: Indicates stronger repayment capacity.

  • Higher DTI: Reflects higher financial strain.

Example:

An entrepreneur in Abu Dhabi earning AED 40,000 monthly with AED 12,000 in monthly debt obligations has a DTI of 30% — typically acceptable for consumer credit approvals.