Why and how to figure your DTI ratio
Formula for DTI
Example of DTI ration at 33/38 with gross income of 50,000.00 year.
Yearly gross income 50,000 divided by 12 = 4166.00 per month income
4166.00 x .33 = $1374.78 allowed for mortgage expenses
4166.00 x .38 = $1583.08 allowed for recurring debt
What does this mean, you would qualify for a mortgage payment with taxes and insurance of $1374.78 a month.
Now you know how to figure your DTI ratio but do you know why you should know this. You'll need to know this for a mortgage loan or to see if you qualify for a loan modification. The many new programs put in place may make it possible for you to get a modification on your home loan.
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