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Libby Wells. February 20, 2024 at 11:14 AM. Key takeaways. Your debt-to-income (DTI) ratio is a key factor in getting approved for a mortgage. ... How to calculate your debt-to-income ratio.
One of the many variables lenders use when deciding whether or not to loan you money is your debt-to-income ratio or DTI. Your DTI reveals how much debt you owe compared to the income you earn.
In this case, your total DTI would be 0.40, or 40 percent. To confirm your number, use a DTI calculator. What is a good debt-to-income ratio? The higher your DTI, the riskier you appear to lenders.
The two main kinds of DTI are expressed as a pair using the notation / (for example, 28/36).. The first DTI, known as the front-end ratio, indicates the percentage of income that goes toward housing costs, which for renters is the rent amount and for homeowners is PITI (mortgage principal and interest, mortgage insurance premium [when applicable], hazard insurance premium, property taxes, and ...
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Using the 28% rule, we can calculate the recommended gross monthly income required for a loan of this size. To find this number, divide the monthly mortgage payment by 28% (or 0.28): $3,555 / 0.28 ...
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