Posts from June 30th, 2021
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Debt-to-Income Calculation
Debt-to-Income Calculation
If you are considering purchasing a home soon, you need to be familiar with your debt-to-income calculation. Understanding this simple math formula could mean the difference between getting approved or getting denied for a home loan.
The discussion below will explain how to calculate this ratio and how it is used by mortgage lenders to approve people to buy a home.
The debt-to-income ratio, also called the DTI ratio by the mortgage industry, is a comparison between how much money people are making versus how much is being spent on debt.
The formula looks like this:
Total monthly debt payments ÷ monthly income = DTI
Here is a simple example that will explain how the math works.
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