What does a debt-to-income (DTI) ratio measure?

The debt-to-income (DTI) ratio is a financial metric used to measure the percentage of a borrower's gross monthly income that is allocated toward servicing debt obligations. This calculation typically includes all recurring monthly debts, such as mortgage payments, car loans, student loans, credit card payments, and any other form of installment or revolving credit.

Lenders often use the DTI ratio to evaluate a borrower’s ability to manage monthly payments and determine their creditworthiness. A lower DTI ratio generally indicates better financial health and a greater capacity to take on new debt responsibly, while a higher ratio may raise concerns about the borrower's ability to manage additional payments.

In the context of the provided choices, the other options do not accurately capture the essence of the DTI ratio. While some deal with financial metrics, they focus on different aspects like rent payment percentages, total debt in relation to assets, or overall income rather than the specific assessment of debt in relation to income that the DTI ratio provides.