To qualify, borrowers must be up-to-date on their mortgage, have a loan owned and serviced by one of the five
- Debt-to-Income (DTI) identifies the percentage of your gross monthly income (the amount you earn before tax) that goes towards your monthly debts. Your monthly debt is the sum total of all your recurring payments such as personal loans, auto loans, student loans, credit card payments, child support, and any other expenses that you would find on your credit report. This does not include mortgage payments, rent or regular expenses like food, transportation and utilities. It is very important to provide your monthly debt and annual income amounts accurately to estimate your DTI.
- Your DTI is estimated by dividing your total monthly debt by your gross monthly income.
- Monthly debt / gross monthly income = DTI %
- Generally, DTI is displayed as a range of 20% to 50% and reflects an estimate of the top and bottom of your affordability. This range will help you figure out what you can afford and also helps lenders determine your approval status for a mortgage loan.
- A DTI score of 36% or less is often regarded as affordable by lenders – hence a range that we recommend. Lenders frequently consider the higher your DTI, the more difficult it will be to make your monthly payments. Generally, the lower your DTI, the greater probability you will have of qualifying for a loan.
- See below for estimated DTI percentages and how they relate in terms of your budget (what you can afford in monthly payments based on the information you have provided).
20-27% Quite affordable with your budget
28-36% Affordable with your budget
37-43% Stretching your budget thin
44-50% Very tough with your budget
If we talk about economic theory and predictions, those factors should be resulting in a boom in mortgage refinancing. But locking in a deal is proving to be a challenge these days — even for well-heeled homeowners. The reason for this is that low appraisals and tight lending standards are making it hard for many borrowers to refinance, even if they have good credit rate and substantial assets. Even those who meet these hurdles can face frustrating waits.
Realtor.com Staff Date Unknown Debt-To-Income Ratio https://www.realtor.com/mortgage/tools/affordability-calculator/