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What Is Debt-To-Income Ratio (DTI)?


What Is Debt-To-Income Ratio (DTI)?

Your Debt-To-Income Ratio is the percentage of your monthly income that goes to paying your monthly debt payments. It is used by lenders to determine your ability to manage monthly mortgage payments and existing debts. A low DTI ratio indicates a good balance between debt and income and indicates you are a less risky borrower.

How To Calculate Your Debt-To-Income Ratio:

Step 1 – Add up your monthly bills which may include rent, student and/or auto loans, and credit card payments

Step 2 – Divide that sum by your income before taxes

Step 3 – Your DTI result should be in the form of a percentage

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