How to calculate your debt to income ratio? A debt-to-income ratio (DTI) is one way lenders (including mortgage lenders) measure an individual’s ability to manage monthly payment and repay debts. DTI is calculated by dividing total recurring monthly debt by gross monthly income, and it is expressed as a percentage.
How to calculate debt to income ratio for a mortgage? DTI is calculated by dividing your total monthly debt payments by your monthly gross income (before taxes). Debts to include are housing payments (mortgage or rent), car payments, student loans, alimony, maintenance, child support, credit card minimum payments, and line-of-credit minimum payments.
How is debt to income ratio calculated? To determine your DTI ratio, simply take your total debt figure and divide it by your income. For instance, if your debt costs ,000 per month and your monthly income equals ,000, your DTI is ,000 ÷ ,000, or 50 percent. This number doesn’t necessarily portray a detailed picture of your financial strengths and weaknesses, but it does give lenders the thumbnail sketch of your finances they need to make a decision.
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