DTI Calculation
How debt-to-income ratio is calculated and what it means for affordability.
Debt-to-Income (DTI) ratio is a key affordability metric that measures monthly debt obligations as a percentage of monthly income.
The DTI formula
DTI = (Monthly Obligations / Recognized Monthly Income) x 100
A lower DTI indicates more financial headroom; a higher DTI indicates tighter finances.
What's included in obligations
The denominator of DTI includes:
From bank statements:
- Fixed obligation payments (rent, mortgage, loans)
- Essential variable expenses (utilities, groceries, transport)
- Bank fees and charges
From credit reports (when provided):
- Credit card minimum payments
- Personal loan instalments
- Vehicle finance payments
- Mortgage payments
- Other credit facilities
Not included:
- Discretionary spending
- Internal transfers
- Savings contributions
- One-off purchases
Credit report reconciliation
When a credit report is provided, oqui reconciles it with bank statement payments:
- Matched accounts - Credit obligation found in both sources
- Bank only - Payment visible in bank but not on credit report
- Credit report only - Obligation on credit report, no matching bank payment
Unmatched credit report obligations are added to total obligations for DTI, ensuring all debts are captured.
DTI status thresholds
oqui classifies DTI into status levels:
| Status | Typical Range | Meaning |
|---|---|---|
| Healthy | < 36% | Comfortable debt level |
| Elevated | 36% - 50% | Higher than ideal, monitor closely |
| Critical | > 50% | Over-indebted, high risk |
These thresholds are configurable in your affordability rules.
Interpreting DTI
Low DTI (< 30%) Strong affordability position. Significant income buffer for additional obligations.
Moderate DTI (30-40%) Reasonable affordability. Limited room for additional debt.
High DTI (40-50%) Stretched finances. Any new obligation significantly impacts cash flow.
Very high DTI (> 50%) Over-extended. More than half of income goes to debt servicing.
DTI vs. surplus
DTI and surplus provide complementary views:
- DTI is a ratio - useful for comparing across income levels
- Surplus is an absolute amount - shows actual rand value available
Both are included in assessment results.
Factors affecting DTI
Income side:
- Haircuts applied to variable income reduce recognized income, increasing DTI
- Including/excluding certain income types affects the calculation
Obligation side:
- What categories count as obligations
- Whether discretionary spending is included
- How credit report items are treated
Configure these in your affordability rules to match your lending criteria.