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ANGELA B | How do i figure out my debt to income ratio. i am new at this and i really want to get my credit straight.? |
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kitykatkeith
 |
You need to have a figure of all of your monthly expenses and a figure of your monthly income (pre-tax).
Now divide your expenses $ / by your income $.
You will get a figure .(whatever) - this is your debt to income ratio. |
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Expert Realtor
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Here is how you do it: (This is general, each underwriter calculates it a little different)
First...calculate your income: Take your GROSS (before taxes) monthly salary. If you get paid by the hour, take your hourly salary x 2080.
Second...calculate your monthly debt:
This is your credit card minimums (regardless of what you actually send them), loan installment payments and child support if it applies. Don't add things like car/health insurance premiums, electric bills, etc.
Add in your mortgage payment with the taxes and insurance...what they said you would be paying per month. If you have to pay HOA dues, add those in there too.
Take your monthly debt, and DIVIDE by monthly salary, whatever you get on the calculator, MULTIPLY that figure by 100.
That figure should not be higher than 45....this is really the max that anyone should realistically be at. 36 is a better number.
Some lenders will go as high as 55, but I am assuming you want to eat <wink>.
Note: Anyone that is willing to go 50 and over is probably subprime, and you will be robbing Peter to pay Paul to make that payment.
Good Luck. |
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zilla
 |
dti or debt to income is calculated as follows
determine income level,,, gross income before taxes for last 2 years. divide that # by 24 to get monthly average for last 2 years. set # aside.
add up all your rent, credit card, cell phone bills (if they show on credit) car payments, department store cards, victoria secret cards etc and then total those monthly payments. just the paymentsthat show up on credit,,,, NOT food electric, water garbage etc. DO add any union dues or amount contributed to a 401 k or IRA out of your paycheck. This number is your monthly debt figure,,,,, divide it by your monthlu=y income figure and you will have a percentage. DTI is expressed as a % of gross monthly income required topay stuff off.
If you have a house payment, substitute rent for principal, interest, tax and insurance (piti) plus homeowner fees if applicable.
If you are hourly employee with a recent raise use following formula.multiply wage x 2080 (hours in standard workyear) and divide by 12. this will give you your gross monthluy hourly wages provided you work at least 40 hours a week. Then calculate average overtime hours and multiply times OT wage and add that in after dividing by 12.
for a house you usually cannot exceed 45% DTI
some places let you go to 50% and even 55% but they will have higher rates. the lower the % the better risk grade usually.
If you want to get and keep credit straight just pay on time, keep balances low, do not let anything go to colections and avoid excessive debt. Pay cash for cars to keeppayment off your credit and lower your dti. accept credit line increases but do not use the rope they give you. Best thing is to have a lot of credit and not use it..... imaging always being ablew to go out and spend 10k but not doing it,,,, that is a good credit risk. If you are trying to buy a house let me know, I can help.
Zilla out |
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hirebookkeeper
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Take your total debt and divide by your income. If the answer is greater than 1, your debt is higher by the decimal amt than your income |
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fine touch of class
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your total debt devided by your income |
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kate
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Add up all your monthly contract obligations . . .
(mortgages , vehicle loans , student loans , credit cards etc . . . debt your are obligated to )
Then divide by your monthly income !
Simple debt / income !
When aiming for a mortgage they want the house and all other debt to be less than 35% of your income .
Never buy a vehicle or make major purchases before applying for a mortgage AND pay off ALL credit cards .
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>... |
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Ron Berue
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Easy enough:
Step 1] Add up ALL your GROSS monthly income from all sources: interest on back accounts; income from job[s], etc.
Step 2] Add up ALL your outstanding bills - including credit card debt, child support, day care, etc., obligations and loans - including student loans, rent and car payments.
Step 3] Divide Step 2 by Step 1] to get your percentage.
Example: Total gross monthly income: $3,000
Total monthly obligations: $1,200
1,200 divided by 3,000 equals 40%.
40% divided by 100% equals 2.5 to 1 OR expressed as follows: 2.5:1 This is your debt to income ratio.
A second suggestion: GO to your bank or credit union. Ask the manager or one of the wonderful folks working there what the bank or lending institution takes into consideration when considering a loan to an individual.
I wish you well.
Ron B. |
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OC1999
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Debt to Income is generally calculated from your Gross Pay compared to your monthly minimum obligations.
So if you Gross $5,000 a month
You have a Car Loan of $250 a month, and total minimum payments on all of your credit cards of $750 a month.
Your DTI Ratio would be $1000/$5000 or 20%
The lower this ratio the better you are looked at by lenders. |
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clemenza222
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you have to add up all debts paid during the month and then divide it by the income you make per month. this will give you your DTI%. 50% or lower is good. |
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