Debt-to-Income Ratio Worksheet
This worksheet helps students understand and calculate debt-to-income ratio, a key concept in personal finance and economics.
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Debt-to-Income Ratio Worksheet
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Read each question carefully and provide thoughtful answers. For calculations, show your work. This worksheet focuses on understanding and calculating the Debt-to-Income (DTI) ratio.
1. What is the Debt-to-Income (DTI) ratio and why is it important in personal finance?
2. The DTI ratio is calculated by dividing your total monthly debt payments by your gross monthly .
3. A lower DTI ratio generally indicates a financial risk to lenders.
4. Most lenders prefer a DTI ratio of % or less for mortgage approvals.
5. Sarah has a gross monthly income of $4,000. Her monthly debt payments include a car loan of $300, student loan payments of $200, and a credit card minimum payment of $50. What is Sarah's DTI ratio?
10%
13.75%
25%
16.25%
6. Imagine a person has a DTI ratio of 50%. What are some potential challenges they might face when trying to apply for a new loan or manage their finances?
7. A high DTI ratio always means a person is financially irresponsible.
True
False
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