DTI is your debt to income ratio. Simply put take your monthly debt payments (car, rent, credit cards, etc… but not utilities) you have and compare it to your monthly income. The resulting number could mean the difference between being approved for loan or being rejected. Let’s say your monthly debt is $1,850.00 and your monthly gross (before taxes) income is $4,000.00. You would then take $1,850/$4,000. Your DTI is 46% which is ten percent higher than where you want to be. The ultimate DTI is 36% or LOWER. Meaning you want less debt and more income. Keep in mind that the higher your DTI the creditor views you as a greater risk. This in turn will result in a denial of the loan or a higher interest rate or a higher down payment.
Calculate your DTI here.
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