debt-to-income ratio
Let an agent explain how the debt-to-income ratio is defined and calculated, relay typical limits and regulatory uses in general terms, distinguish it from loan-to-value and debt-service ratios, and route personal borrowing decisions to licensed advisers.
Bundle → Layer → Finding → Questions Filled
4 bundles · 8 layers · 8 findings · 16 questions
Define What the ratio is.
Definition
Definitions.
Definition
Definition.
- How is the ratio defined and calculated, and which debts and income count? definition
- Is the user asking whether they can afford a loan, which needs a licensed adviser? boundary
Related
Related ratios.
Related
Related.
- How does it differ from loan-to-value, loan-to-income and debt-service ratios? definition
- Which entry fits the related ratio? action
Use Lending use.
Lenders
Lender limits.
Lenders
Lenders.
- What limits do lenders typically apply, and how do they vary by product? provenance
- Which sources give current limits? provenance
Regulators
Regulatory use.
Regulators
Regulators.
- How do regulators use income-based limits for financial stability? provenance
- Which entry fits macroprudential policy? action
Interpret Interpretation and limits.
Meaning
What it shows.
Meaning
Meaning.
- What does the ratio show and not show about affordability? provenance
- Which references are standard? provenance
Macro
Household debt.
Macro
Macro.
- How is household debt-to-income measured at national level, and where is it published? measurement
- Which sources are cited? provenance
Context History and debate.
History
History.
History
History.
- How did income-based lending limits develop, especially after the 2008 crisis? provenance
- Which entry fits mortgage regulation? action
Debate
Debates.
Debate
Debate.
- What debates exist about income limits and access to housing, with positions attributed? provenance
- Is the presentation neutral? boundary
Classifiers Filled
- Family
- Thing Registry
- Category
- Cross-cutting context
- Entry kind
- thing
- Plane
- XCT
- Domain
- XCT.REL
What it is Filled
A ratio used in lending that compares a borrower recurring monthly debt payments, or in some definitions total debt, with gross monthly income, expressed as a percentage; lenders and regulators use it to judge affordability of mortgages and other loans, with limits that vary by country, lender and product.
Why it exists Filled
Let an agent explain how the debt-to-income ratio is defined and calculated, relay typical limits and regulatory uses in general terms, distinguish it from loan-to-value and debt-service ratios, and route personal borrowing decisions to licensed advisers.
Distinguishing features Filled
- Ratio of debt to income
- Payment-based or stock-based definitions
- Used by lenders and macroprudential regulators
- Limits vary by jurisdiction
What robots and AI may and may not do Filled
Must not
- Give personal advice on whether to borrow or which loan to take.
- Compare ratios calculated under different definitions as if they were the same.
- Treat a passing ratio as proof that a loan is affordable.
- Use a person's income or debt data for anything beyond the calculation they asked for.
Only with a human decision
- Deciding to grant or refuse credit on the basis of the ratio.
May
- Compute a debt-to-income ratio from figures a person has supplied, stating which definition is used.
- Explain how lenders and regulators use the ratio and its limits.
Moral aspects Filled
- The ratio gates access to housing and credit and can shut out people with irregular incomes.
- Income and debt figures are sensitive personal data.
Who is affected
- Borrowers
- Lenders
- Households
Owners Filled
Steward
Nobody owns the measure; lenders apply it and financial regulators may set limits.
Links to other meta-models Filled
parent
- Q111949165 - registry parent class
- Q22915325 - registry parent class
related
- leverage ratio - a financial ratio
- mortgage lending - affordability assessment
- loan-to-value ratio - a different measure
- financial regulator - macroprudential limits
What else AI and robots need to interact with it Filled
Identity and identifiers required Filled
- Vercy registry: vr.tr.debt-to-income-ratio
- Wikidata: Q5248585 (https://www.wikidata.org/wiki/Q5248585)
Direct properties not applicable Not applicable
- common mortgage limits: about 36-45 percent - payment-based ratio; varies by lender and country
- macroprudential caps: multiples of annual income, about 3.5-5 ratio - in some countries
Plane XCT: no invented physical properties.
Recognition optional Filled
- Debt payments or total debt divided by income
- Used in affordability assessments
- Loan-to-value compares loan with property value; debt-service ratios include different payments
- Not visible; a percentage on a loan application.
Capabilities and actions required Filled
- explain the definitions and calculation
- relay typical limits and regulatory uses
- distinguish it from related ratios
- route personal borrowing questions to advisers
Hazards and failure modes required Filled
- Comparing ratios with different definitions
- Overborrowing despite passing the ratio
- Agents giving personal financial advice
Standards and interfaces required Filled
- Mortgage lending rules and affordability assessments
- Macroprudential loan-to-income limits in some countries
- Consumer credit law on responsible lending
Context of use required Filled
- Judging whether a borrower can afford repayments.
- payment-based debt-to-income ratio
- stock-based debt-to-income or loan-to-income ratio
- front-end and back-end ratios in US mortgage lending
- regulatory loan-to-income caps
- household debt-to-income at the macro level
Sources Filled
- Wikidata item Q5248585: debt-to-income ratio - identity and sense of the item
- Wikipedia: Debt-to-income ratio - general description of the item
Open questions
- Should loan-to-income caps be a separate entry?
- How should regulatory rules be linked by country?
- How should definitions be recorded per lender?
Machine files
Provenance
thing registry research (pass 2) · unreviewed
Built from: models/things/publications/thing-q5248585/spec.json