1 / 8

What is Your Debt-To-Income (DTI) Ratio

Find out how to calculate Debt To Income ratio, and what is considered as good DTI to get a loan or mortgage. Learn different ways to lower the DTI ratio. For more tips and advice on personal finance, visit https://www.moneykey.com/articles/

moneykeyloans
Download Presentation

What is Your Debt-To-Income (DTI) Ratio

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. What is Your Debt-to-Income Ratio? AndWhy is it Important?

  2. What is a Debt-to-Income Ratio (DTI)? An official calculation showing how much debt you owe in a month compared to your monthly gross income. DTI = (Monthly Debt Obligations ÷ Gross Income) X 100

  3. What is a Good DTI? A lender wants to see a low ratio because it suggests you have fewer existing debts tying up your cash. According to the Consumer Financial Protection Bureau (CFPB), 43% is generally the highest DTI that may get you a Qualified Mortgage loan.

  4. What is the 28/36 Rule? The 28 This rule specifies you shouldn’t spend more than 28 percent of your gross monthly income on housing expenses. The 36 The 36 in the rule specifies your DTI shouldn’t be more than 36 percent of your gross monthly income.

  5. How to Improve Your DTI Increase your income Decrease your debt

  6. steps to reduce your total debt amount: Cut Expenses Find expenses you can live without. You can put this extra cash towards your debt payments. Use personal loans only in an emergency Put large, unnecessary purchases on the backburner for now, especially if you’d need to take out credit to make them. Cause a Debt Avalanche This strategy focuses on paying off the loan with the highest interest first. This may help limit how much interest you pay. Earn more money Increasing monthly income will lower your DTI ratio if your debt payments remain the same. Throw a Debt Snowball This strategy focuses your debt repayment on the smallest loan first. A quick win may give you the morale boost you need to tackle the next largest loan.

  7. Your DTI Matters Low DTI • The most immediate benefit is that this may keep more cash in your pocket! • With a lower DTI and a potentially higher credit score, you may have greater financial options

  8. Thanks! www.MoneyKey.com Read full article at: https://www.moneykey.com/articles/what-is-your-debt-income-ratio-why-important/ For financial advice and tips, visit:https://www.moneykey.com/resources/

More Related