What Is Debt-to-Income Ratio (DTI) and Why Renters Should Know It
The short answer
Debt-to-income ratio (DTI) measures your monthly debt against your gross income. Learn how DTI affects rental applications and how Settl lets you display it on your tenant verification report.
What Is Debt-to-Income Ratio?
Debt-to-income ratio (DTI) is a simple formula: your total monthly debt obligations divided by your gross monthly income, expressed as a percentage.
Formula: Monthly Debt Payments ÷ Gross Monthly Income × 100 = DTI%
For example, if you earn $5,000/month and pay $900/month toward a car loan, student loans, and a credit card, your DTI is 18%.
Why DTI Matters for Renters
Lenders have used DTI for decades to evaluate mortgage applicants. The conventional mortgage threshold is 43%, above that, most lenders won't approve you.
Landlords increasingly care about it too. A tenant with a low DTI has more disposable income relative to their debt load, which means a missed paycheck or unexpected expense is less likely to result in a missed rent payment.
But until now, there was no standardized way for a renter to show their DTI to a landlord without handing over bank statements or tax returns.
What Are the DTI Thresholds?
Here's how the numbers break down:
| DTI Range | Rating | What It Means |
|---|---|---|
| 20% or below | Excellent | Very low debt load relative to income |
| 21–30% | Good | Comfortable, well within conventional benchmarks |
| 31–36% | Acceptable | At the standard housing benchmark |
| 37–43% | Moderate | Within conventional lending range but tighter |
| Above 43% | Elevated | Above the conventional lending threshold |
Settl's Tenant-Controlled DTI Display
Settl is the first portable tenant screening platform to offer a tenant-controlled DTI display on your verification report.
Here's how it works:
- You opt in from your readiness dashboard. DTI is off by default. You choose whether to show it.
- Settl calculates it from verified data. Monthly debt comes from your Plaid bank connection (recurring obligations like loan payments). Gross income comes from your Argyle payroll or Plaid income estimate.
- It appears on your report with a color-coded badge. Landlords see "22%, Excellent" (or whichever tier applies) alongside a debt-adjusted rent ceiling.
- You can remove it anytime. If you opt out, it disappears from your report immediately.
What Is the Debt-Adjusted Rent Ceiling?
When DTI is enabled, Settl also calculates a debt-adjusted ceiling, a conservative estimate of how much rent you can afford after accounting for existing debt obligations:
(Gross Income − Monthly Debt) ÷ 3 = Debt-Adjusted Ceiling
If you earn $6,000/month and carry $600/month in debt, your debt-adjusted ceiling is ($6,000 − $600) ÷ 3 = $1,800/mo.
This gives landlords a more complete picture than the standard income-to-rent ratio alone.
Who Should Use the DTI Feature?
Turn it on if:
- Your DTI is below 30%, it actively differentiates you from other applicants
- You're competing against multiple applicants and want every advantage
- You're applying for a unit at the high end of your verified rent ceiling
Leave it off if:
- Your DTI is above 40%, it won't help your application
- You're a subsidy or voucher holder Settl automatically excludes you from DTI display to protect your legal rights under source-of-income laws
DTI on Your Settl Verified Passport
Your Settl Verified Passport already includes bank-verified income, identity, employment, rent history, credit, criminal background, and landlord references. DTI is the newest layer, and the only one that quantifies debt relative to income in real time from verified sources.
No other portable tenant screening platform offers tenant-controlled DTI display. It's part of what makes Settl the most complete renter profile available.
Settl Team
Settl Editorial
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