Debt-to-income ratio
lastmod 2025-06-29created 2025-06-293 edits
The debt-to-income ratio (also debt income ratio, or simply DTI) is the ratio of how much principal and interest a borrower repays relative to their income. It is the share of total income taken up by the annual principal and interest repayments on debt. As a regulatory tool for preventing financial insolvency and improving the fiscal soundness of the country as a whole, the ratio and the borrowers it applies to are set by the government.
In other words, it sets the loan limit by judging future repayment ability based on income. The ultimate goal of the debt-to-income ratio is to prevent in advance the problems caused by reckless lending.
In short
In a nutshell, your debt repayment ratio relative to your ability to pay
The higher the % value (ratio), the more debt you have.
So when regulations get stricter, the % gets lower. (This means loans are only given to people with little debt and high income.)
Example
- Repayment method: equal principal installments (declining payments)
- Loan amount: 300,000,000
- Annual income: 66,000,000
- Loan interest rate: 3.9%
- Annual principal and interest repayment: 20,874,375
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(원금 + 총이자) / 대출기간 * 12
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(본건원리금상환액 + 기타부채이자상환액) / 연소득 × 100
See also
- Korean: 대출
- Korean: 모기지
- Korean: 담보 인정 비율 (LTV; Loan to Value)
- Korean: 총부채 상환 비율 (DTI; Debt to Income)
- Korean: 총부채 원리금상환비율 (DSR; Debt Savings Ratio)
- Korean: 주택청약