Know Your Ratio
What Your Debt-To-Income Means And How It Makes All The Difference
Knowing your debt-to-income ratio is another piece of the puzzle in becoming a homeowner. Before a Lender can give you money, they first got to have the confidence of knowing that you as a borrower will pay them back. The bottom line is this: When you decide to get a home loan, the lower your Debt-to-Income (DTI) ratio the better. It all comes down to the “risk” that Lenders are going to make when they provide you financing for your home. In the Lender’s mind, like a broken record, they’ll be repeating their fundamental concept – “Ability to Repay”. They will determine that you as a homeowner who has asked for a home loan will have the income and assets to make the mortgage payment through the life of the loan. That’s why it is your job to first know what your ratio is before you seek financing for buying a house. The graphic below will show you how to calculate your DTI by diving your monthly debt you your gross monthly income.