Debt-to-Income ratio is a comparison of monthly debts to monthly income, this is a major factor lenders consider when underwriting a loan. Lenders like to see the ratio at or below 43%, but loans have been approved up to 50%. Example: Let’s say you are salaried and gross $4,000 per month; Lenders use your gross wages, not take home, for calculating the ratio. Assume your proposed house payment is $1,000, you pay $400 in student loans and another $300 per month for an auto loan. Also suppose you have a credit card balance of $3,000 that requires a minimum monthly...
