Final answer:
The result of dividing a borrower's monthly recurring debt by income to measure debt load and ability to repay, expressed as a percentage, is called the Debt-to-Income Ratio (DTI). The DTI is calculated by dividing the total monthly debt payments by the borrower's gross monthly income and then multiplying by 100 to express it as a percentage.
Step-by-step explanation:
The result of dividing a borrower's monthly recurring debt by income to measure debt load and ability to repay, expressed as a percentage, is called the Debt-to-Income Ratio (DTI). The DTI is calculated by dividing the total monthly debt payments by the borrower's gross monthly income and then multiplying by 100 to express it as a percentage.For example, if a borrower has $1,500 in monthly debt payments and $5,000 in gross monthly income, the DTI would be calculated as (1,500 / 5,000) x 100 = 30%. This means that the borrower's monthly debt payments account for 30% of their monthly income.The higher the DTI, the higher the borrower's debt load relative to their income, which may indicate a higher risk of defaulting on loan payments.