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Today, we'll talk about What is your Debt To Income Ratio (DTI) When Applying for a Mortgage Loan
When applying for a new mortgage, your DTI ratio will play an important role to help determine how much you can borrow.
This blog post will help you calculate your own DTI. This will be useful to you as well as to help determine if applying for a new loan is the best idea for your budget.
DTI is a financial term for debt to income ratio.
Your debt to income ratio is calculated using 2 parts: the front end ratio and the back end ratio.
The front end ratio is the amount of your monthly income that will go towards the mortgage and other housing expenses. It is the amount that is left after your income has gone towards these expenses.
Calculate the front-end ratio by doing the following steps:
Add all your total housing expenses, including your mortgage, property taxes, insurance and any HOA dues, and divide it by your gross monthly income.
Multiply that number by 100 to find the front-end ratio.
For example,
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