Full Transcript is Below:
– [Narrator] If you’ve been thinking about purchasing a home and applying for a mortgage, one of the terms you may hear is DTI. But what is DTI? DTI, or debt to income ratio, is a percentage calculated by dividing your monthly debt by your gross monthly income. Different mortgage programs may have different DTI requirements. To calculate your debt to income ratio, add up your total monthly payments for items such as your mortgage, student loans, auto loan, and credit cards, then divide by your gross monthly income, the amount you earn each month before taxes and other deductions. The lower your debt to income ratio, the more likely it is that you will be able to make mortgage payments and that you will be approved for a loan. DTI is just one factor used to determine your ability to make loan payments. If you need to lower your DTI, ask your loan originator or consult with a credit counseling company.