What Is DTI, and Why Does It Matter So Much? [Hn9ZDD6x1F8]
Debt-to-income ratio, or DTI, is one of those terms that gets thrown around constantly during the mortgage process, and a lot of buyers just nod along without really knowing what it means or why it matters. Here's the plain version. DTI compares how much you owe each month to how much you make each month. Lenders use it to get a sense of how much of your income is already committed to debt, things like car payments, student loans, credit cards, before adding a mortgage payment on top. It's usually shown as a percentage. If you make $6,000 a month and your debts (including your future mortgage payment) add up to $2,400, that's a 40% DTI. This matters because it's one of the main factors lenders look at to determine how much you can comfortably borrow. A lower DTI generally gives you more room, while a higher DTI can limit your loan amount or affect what programs you qualify for. The part people don't always realize is that DTI isn't fixed. Paying down a credit card, finishing off a car loan, or increasing your income can all shift your DTI before you even apply, sometimes opening up more options than you expected. If you're not sure where your DTI actually stands, that's a quick and easy thing to figure out before you start house hunting. #homebuying #firsttimehomebuyer #mortgages #realestate #homeownership Bill Murphy Branch Manager NMLS# 19301 Fairway Independent Mortgage Corporation NMLS# 2289 783 Southbridge Street, Auburn, MA 01501 Phone: 508-407-8300 [email protected] ➜➜➜ SUBSCRIBE FOR MORE VIDEOS ➜➜➜ To never miss a video about mortgage & real estate-related topics, please subscribe & then hit the bell notification here ➜ Disclaimer: This is not an offer to enter into an agreement. Not all customers will qualify. Information, rates, and programs are subject to change without notice. All products are subject to credit and property approval. Other restrictions and limitations may apply. Bill Murphy, Branch Manager NMLS # 19301, Equal Housing Opportunity. Licensed in: CT, FL, MA, NH, RI, State Disclaimers: Fairway Independent Mortgage Corporation cannot guarantee your privacy or security when writing detailed personal information on public social media sites like this. Please contact our customer service line directly at 1-877-699-0353 to discuss any personal details or concerns you may have. Please be advised Fairway cannot guarantee your privacy or security when accessing third-party links.