How To Calculate DTI (Debt-To-Income Ratio) | Broke Millennial A…
How To Make Tagliatelle with Fava and Herb Pesto | Rachael Ray
Stylist Stacy London Says Skinny Jeans Will Never Die—Here's Why
Sam Sifton's Meatball Salad | The New York Times Cooking No-Reci…
How To Make John's "Sundays With Mom" Champagne Cocktail | John …
How To Make French Onion Monte Cristo with Spring Greens Salad |…
Justin Long's Mom Adorably Reveals What He Was Like When He Was …
We Celebrate a Teacher Who Makes Every One of Her Students a Per…
How To Make Boozy Berries | Rachael Ray
A Doctor's Favorite Types Of Calming Teas For Stress | Gastroent…
A Visual Trick That Could Help Stop Anxious Thoughts Instantly |…
How To Make Ramen with Sesame-Miso Broth and Baked Crispy Tofu |…
4 Ways Stress Could Be Hurting Your Stomach + Tips For Relief | …
Rach's Swordfish Cutlets with Garlic Spaghetti + Self-Taught DIY…
How To Make Pennsylvania Dutch Potato Filling | Carson Kressley
Deals From Rue La La: Cooling Sheets For Hot Sleepers, Adorable …
How To Make Gluten-Free Lemon Bars | low-carb, low-sugar, dairy-…
How To Make Tacos Veracruz | Rachael Ray
Rob Lowe Talks Working With His Son on 9-1-1 Lone Star + Rach Ma…
'80s Icon Andrew McCarthy Shares "Brat Pack" Stories From New Me…
Teacher Working With Local Food Bank To Feed Hungry Kids Says Yo…
Everyone talks about the importance of your credit score — but your debt-to-income ratio (DTI) may be just as important, Broke Millennial: Stop Scraping by and Get your Financial Life Together author Erin Lowry says.
She explains why.
WHAT IS DEBT TO INCOME RATIO & WHY IS IT IMPORTANT?
"Why this matters is because it actually really gives you a sense of how much more debt, if any, you can handle," Erin explains.
In other words, DTI is a key factor lenders use to decide whether or not to give you a loan.
"Lenders care a lot about it," the personal finance expert says. "Of course your credit score is important, but this is important, too."
HOW TO CALCULATE DTI
Debt-to-income ratio (DTI) = (Monthly debt / Monthly gross income) x 100
Let's break that down.
Monthly debt: "It's not your total debt," the Broke Millennial author says. It's student loans, car loans, your mortgage, or balances on credit cards that you're paying off in monthly installments.
Monthly gross income: Your monthly income before taxes, healthcare costs and retirement contributions are taken into account.
WHAT IS A GOOD DTI?
"If it comes out at 20% or less, you're doing pretty well. It's kind of like having a 700 credit score. You're looking good. If you're at 40% or higher, it might be a little bit of a red flag."
