Review us

Debt-to-Income Ratio: What It Is and How to Calculate It

Debt-to-Income Ratio

The “debt-to-income ratio“, or “DTI ratio” as it’s known in the mortgage industry, is the way a bank or lender determines what you can afford in the way of a mortgage payment.

By dividing all of your monthly liabilities (including the proposed housing payment) by your gross monthly income, they come up with a percentage. This key figure is known as your DTI, and must fall under a certain number in order to qualify for a mortgage.

The maximum debt-to-income ratio will vary by the mortgage lender, loan program, and investor, but the number generally ranges between 40-50%.

Here’s a basic example of the debt-to-income ratio:

$120,000 annual gross income as reported on your tax returns/W-2 form
Monthly liabilities: $3,500
Monthly gross income: $10,000
35% debt-to-income ratio
In this example, your debt-to-income ratio would be 35% ($3,500/$10,000)

Our Loans

Mortgage Professionals

Refinance Loans

Home Purchase Loans

Situation Loans

Mortgage Calculator

Use our mortgage calculator to the left. This will make estimating your monthly mortgage payment easier. Just enter the home value, your down payment amount, the APR (%), the loan terms (how long you will be paying your mortgage), The taxes for the house per year, Homeowners insurance cost per year, The PMI (%), and the closing costs. Click the Compute Mortgage Payment button and see how much house you can afford!

Ready to buy a home?

I enjoyed working with this company and they were professional and took care of my loan in a timely manner. There was great follow-up, by phone, email and the staff were available on weekends, too. This made it easier for me since it was my first time actually going through a process like this.

Tracielynn N.
Satisfied Customer

Very helpful and kind. Always willing to answer any questions I had (no matter how stupid). Great experience.

Megan C.
Satisfied Customer

Made the experience with buying my home as smooth as can be and I had no worries. Always kept up to date on what/where we were in the process. Couldn’t have asked for a better experience.

Nancy N.
Satisfied Customer

Still Have Some Questions? Call me for a Free Consultation at 715-497-7155