What is debt to income calculator? This is the first thing that we should be asking before we can look at the various aspect of this calculation. The debt-to-income ratio estimator (DTI) is what is gotten and expressed as a percentage and is a person’s total “minimum” monthly debt that is divided by the person’s gross monthly income.
There is a debt-to-income calculator that quickly and accurately takes in to account the person’s annual income and monthly debts that would be to determine the person’s debt-to-income ratio. When you see the calculator, it would be able to display the person’s likely eligibility that would be used in getting a mortgage. This mortgage is going to be based on your debt-to-income ratio.
The calculator is known to assume that the person only have one mortgage. Also it means that the person’s current housing expenses will be applied when a new home is about to be bought.
Debt-to-Income Terms
Annual income
This is the combined annual income for you and your co-borrower. Include all income before taxes, including base salary, commissions, bonuses, overtime, tips, rental income, investment income, alimony, child support, etc.
Minimum credit card payments
This is the sum of minimum credit card payments that you pay each month. Do not include credit card balances that you pay off in full each month.
Mortgage/rent payments
This is the sum of any house payments (rent or mortgage) other than the new mortgage you are seeking.
Car loan payments : This is the sum of any monthly car payments that you pay each month as part of a lease and/or financed car payment.
Other loan obligations: Other loan obligations may include – Student loans; Alimony/child support payments; any house payments (rent or mortgage) other than the new mortgage you are seeking; Rental property maintenance; and other personal loans with periodic payments.
How to figure out your DTI:
Add up your minimum monthly debt and divide it by your gross monthly income.
Example:
Gross monthly income: $1,000.
Monthly debt: $300 (car payment of $250 and credit card minimum payment $50 = $300)
300 / 1000 = 0.3, or 30%
Your DTI is 30%
What’s a good DTI?
Any DTI less than 36 percent is considered workable by most mortgage professionals. If the DTI is higher than 36 percent, it can be difficult to qualify for a mortgage. The lower you’re DTI, the more you can borrow and the more options you’ll have. A DTI of 20 percent or below is considered excellent.