Loan Officer Practice Exam 2025 – Comprehensive All-in-One Guide for Exam Success!

Image Description

Question: 1 / 415

In the context of mortgage lending, what does DTI ratio stand for?

Debt to Income ratio

The correct answer is Debt to Income ratio. This term refers to a financial metric used by lenders to assess a borrower's ability to manage monthly payments and repay debts. The DTI ratio is calculated by dividing an individual's monthly debt payments by their gross monthly income, expressed as a percentage. A lower DTI ratio is preferable as it indicates that a borrower has a manageable level of debt relative to their income, making them a more attractive candidate for a mortgage. Lenders commonly use this ratio to evaluate risk, as it provides insight into a borrower's financial health and their capacity to take on additional debt. Understanding the DTI ratio is crucial for loan officers when determining the eligibility of borrowers for mortgage products.

Get further explanation with Examzify DeepDiveBeta

Direct Taxation Index

Debt Transfer Indicator

Debt Threshold Index

Next Question

Report this question

Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy