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Your debt-to-income (DTI) ratio is a key factor in getting approved for a mortgage. The lower the DTI for a mortgage the better. Most lenders see DTI ratios of 36 percent or less as ideal.
For this example, divide your monthly debt payments ($2,400) by your total monthly gross income ($6,000). In this case, your total DTI would be 0.40, or 40 percent. To confirm your number, use a ...
Debt-to-income ratio. In the consumer mortgage industry, debt-to-income ratio ( DTI) is the percentage of a consumer's monthly gross income that goes toward paying debts. (Speaking precisely, DTIs often cover more than just debts; they can include principal, taxes, fees, and insurance premiums as well. Nevertheless, the term is a set phrase ...
Lenders view your debt-to-income ratio as a good predictor of your ability to manage your recurring monthly bills along with the potential monthly payment on the loan they might give you.
For example, a standard mortgage may be considered to be one with no more than 70–80% LTV and no more than one-third of gross income going to mortgage debt. A standard or conforming mortgage is a key concept as it often defines whether or not the mortgage can be easily sold or securitized, or, if non-standard, may affect the price at which it ...
A lender will compare the person's total monthly income and total monthly debt load. A mortgage calculator can help to add up all income sources and compare this to all monthly debt payments. [ citation needed ] It can also factor in a potential mortgage payment and other associated housing costs ( property taxes , homeownership dues, etc.).
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