What Debt to income is

Question

Can someone explain what debt to income is and means?

Jesse Collins · Answer

@David Robinson thanks a lot David for explaining it and the example. Appreciate it!

Victoria Mason · Answer

@David Robinson I’m planning to house hack with FHA, however, in my area the current market for FHAs is limited. So as a secondary plan I may finance a personal residence and do a live in flip then it would turn into an investment property.

In addition to that, if I am able to get an FHA I’m still unclear on how financing a second home would work (after the mandatory year of living there it would turn into an investment property). Obviously that’s two loans and that would raise your DTI, making it hard to get approval for the second loan, no?

I’m still very new and trying to shove all of these “methods”, requirements and restrictions etc into my mind at once - it can get a little confusing lol thank you for responding.

Crystal S. · Answer

@Jesse Collins your welcome! Anytime!

Jesse Collins · Answer

@Nick B. Ok appreciate the information

Jesse Collins · Answer

@Crystal S. thank you so much that was very informative and I appreciate it!

Jesse Collins · Answer

@Victoria Mason what is FHA? Still getting use to the Lango￼

Crystal S. · Answer

@Jesse Collins

Hi Jesse I am a Loan Officer I deal with DTI all day long. Your debt to income is a ratio percentage of your debt against your current income...

For example if your monthly debt total being mortgage, car loan, credit cards, personal loan, student loans ect... you would take that amount and divide it by your monthly income, and that will give you your DTI ratio.

Example:

$3000 debt / $7000 income = 42.8 rounded = 43% DTI

This ratio is what lenders use to see how stable someone would be in paying back a home loan.

David Robinson · Answer

Is this for personal residence or investment property?

David Robinson · Answer

@Victoria Mason Is this for personal residence or investment property?

Victoria Mason · Answer

@David Robinson if you’re trying to get a conventional loan what % would you want your DTI to be below? Thank you!

What Debt to income is

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