- The debt portion of "DTI" is the sum of all fixed monthly expenses, not loan balances. Debts used in the calculation are those that appear on a credit report such as car, mortgage, credit card or student loan payments, plus other fixed monthly obligations such as rent or child support.
- Lenders consider gross monthly income (before taxes) from all sources, and can include child support or alimony if requested by the borrower. Including all income that can be documented will increase the likelihood of a loan approval.
- DTI can be determined with a simple manual calculation.Calculator image by Alhazm Salemi from Fotolia.com
There are online calculators to determine debt to income ratios. To calculate the percentage manually, divide total monthly payments by total monthly income. A score of 36 percent or less is considered a healthy debt load, while anything over 50 percent is usually considered overextended. The percentages in the middle might be considered acceptable with positive mitigating factors, such as high credit score, liquid assets, career longevity or pledged collateral.
Debt Considerations
Income Considerations
Calculation Basics
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