The debt-to-income (dti) ratio of a borrower is used to compare to the borrower’s gross monthly income. a. monthly credit expenses (credit cards and loans) b. monthly debt expenses from loans (home, personal, auto, student) c. monthly housing expenses (rent or mortgage, homeowner’s insurance, property tax, utilities) d. monthly living expenses (rent or mortgage, property tax, mortgage insurance, minimum credit card payments, and monthly loan payments)

option d. monthly living expenses (rent or mortgage, property tax, mortgage insurance, minimum credit card payments, and monthly loan payments)

Justification:

The debt-to-income ratio is fundamental to decide whether a person qualifies to obtain a loan or not.

The ratio takes into account all the expenses of the person to figure out whether the person will be able to pay a debt with the current incomes.

There are some standards or rules for the debt-to-income ratio depending of the kind of credit or the loaner. A popular one is the 43% rule. Under this rul, if monthly debt payments exceed 43 percent of calculated income, the person will likely not obtain the loan, even if he or she is used to pay their bills on time.