Debt to Income and Your Home Loan Ability
Your debt-to-income (DTI) ratio is a key component of whether or not you qualify for a mortgage loan. This ratio measures your monthly debt payments divided by your monthly income. This number shows how much of your income is tied up in paying debts and can also be used to predict how well you can manage those payments in the future.
A reasonable DTI ratio, including rent or a mortgage payment, is 36% or less. This number is the total of your fixed monthly expenses (rent/mortgage, credit card bills, auto loans, student loans, child support, etc. (not including utilities)), divided by the total of your monthly income.
|Gross Monthly Income
|Monthly Debt Payments
|Rent or mortgage
Debt-to-Income Ratio (total debt/total income)
Published Apr 28, 2014.