Debt-to-income ratio or DTI, is the ratio of your verifiable income that goes to housing expenses and liabilities listed on your credit report. The ratio does not take into account your living expenses like rent, utilities and car payments. You know, all the really fun stuff.

For example — your home loan payment (including escrow) is $1500/mo, your car payment is $500 and you have a credit card with a minimum payment of $200. Your total payments (liabilities) equal $2200 per month. Your gross income is $6000 per month. Your DTI in this example is 37%.

Most lenders prefer that your DTI not exceed 36% but some FHA-approved lenders, (that’s us!) will go all the way up to 50% in some cases.
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