How To Calculate DTI (Debt-To-Income Ratio) | Broke Millennial A…
Clinton Kelly's No-Bake Banana Toffee Pie With Pretzel Crust + R…
Sheet-Pan Meal: Korean-Style Chicken & Veggies + Remember The Ti…
Jason Biggs' Wife Jenny Mollen Adorably Crashes His Interview Wi…
Cherries Wild Host Jason Biggs On Wife Jenny Mollen: I Keep Her …
How To Make a "Pari"rita | John Cusimano
How To Make Moroccan Donuts (Sfenj) With Orange Zest, Honey + Pi…
See Inside The Closet Of Missy Elliott + Jay-Z's Stylist | June …
Michael Peña: "Tom & Jerry" Director Tim Story Hired Puppeteers …
Celebrity Stylist June Ambrose's Words Of Wisdom On Clothes Gett…
Spring Cleaning Tips For Pets That You Might Not Know | NatGeo W…
How To Make Pulled Chicken Paprikash with Egg Noodles | Rachael …
Jason Biggs On Hosting The New Game Show "Cherries Wild" + Rach'…
Rachael Shares Update On Muttville Senior Dog Rescue + February …
How To Make Italian Baked Eggplant with Parmesan (Melanzane di P…
"Superstore" Star Lauren Ash Opens Up About Series Coming to End…
Luxe Deals From Rue La La: Cashmere Pashmina, 18-Piece Towel Set…
Rach's Rotisserie Chicken & Egg Noodle Casserole + Michael Peña …
Board and Batten Wall Trend: How To DIY a Removable Board & Batt…
Freddie Prinze Jr. On Call From Brian Austin Green That Convince…
Home Renovation Ideas That Look Amazing But Are Totally Removabl…
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."
