Calculate your debt-to-income ratio, a key figure lenders use to assess loan and mortgage eligibility.
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The DTI formula is: DTI % = (Total Monthly Debt Payments ÷ Gross Monthly Income) × 100. This includes recurring debt obligations like rent or mortgage, car loans, student loans, and minimum credit card payments, divided by your income before taxes and deductions.
Lenders use DTI as a key indicator of how much additional debt you can reasonably manage. Most conventional mortgage lenders look for a DTI at or below 43%, though requirements vary by lender and loan type, a lower DTI generally improves loan approval odds and terms.
Include rent or mortgage payments, car loans, student loans, minimum credit card payments, and any other recurring debt obligations. Don't include expenses like groceries, utilities, or insurance.
Use gross income (before taxes and deductions), which is the standard measure lenders use for DTI calculations.
Generally, 36% or below is considered good, with many mortgage lenders capping approval around 43%. Ratios above that may make loan qualification more difficult.
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