The Debt-to-Income (DTI) ratio is a measure of how much of a person’s income goes toward debt payments each month. It is calculated by dividing total monthly debt payments by gross monthly income and multiplying by 100 to get a percentage. Lenders use this ratio to evaluate a person’s ability to manage monthly payments and decide if they can afford new debt. A lower DTI indicates that a person has a manageable level of debt compared to income, making it easier to qualify for loans.