FAQs About DTIQ: Why is debt-to-income important?
A: Your lender will use the debt-to-income ratio as a way to measure your ability to manage the payments you make each month, and repay the money you have borrowed.
Q: What sources of income are considered?
A: Typically these are considered:
- Commissions & Bonuses
- Social Security
- Child Support & Alimony
- Any other additional income
Q: What monthly payments are included in the debt-to-income ratio?
- Mortgage payments
- Real estate taxes
- Home owner’s insurance
- Home Owner Association Dues
- Student loan payments
- Minimum monthly credit card payments
- Timeshare payments
- Loan payments
- Child support payment
- Alimony payment
- Any co-signed loan payments
Q: What payment is used for my credit card debts, the minimum payment required or what I actually pay monthly?
A: Typically, your lender will use the minimum monthly payment that is reported on your credit report.
Q: What is considered a good debt-to-income ratio?
A: Each lender is going to consider a different ratio based on the size, purpose, and type of loan that you are applying for. As a general rule, most lenders like to see a DTI below 45%.
Q: What is the formula for calculating my debt-to-income ratio?
A: It is calculated by dividing your total recurring monthly debt by your gross monthly income.
Q: How does my debt-to-income ratio affect my ability to get a loan?
A: Lenders will calculate your DTI to ensure you can afford to take on an additional payment. A low debt-to-income ratio reflects a good balance between your income and debt.
Are You Ready to Buy a Home?As we move out of the summer season and into the fall season, we can’t affirm enough what a wonderful time it is to buy a home at the Lake of the Ozarks. If you have been dreaming about buying a home, it’s time to apply. Interest rates are statistically lower than they have been, and Team Lasson is ready to assist. Visit our website to submit your application and get started!
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Senior Loan Officer
NMLS #: 493712
4655 B Osage Beach Parkway
Osage Beach, MO 65065
**The postings on this site are my own and do not necessarily represent First State Bank of St Charles’s positions, strategies, or opinions.