Credit Score

When you apply for a new mortgage, the lender will evaluate your creditworthiness to determine whether to approve your application and what terms and interest rate to offer you. Your existing debt can affect your creditworthiness in several ways: Debt-to-income ratio (DTI): Your DTI ratio is the percentage of your monthly income that goes towards paying off debt. Lenders typically want to see a DTI ratio of 43% or less, meaning your debt payments don't exceed 43% of your gross monthly income. If your existing debt is high, your DTI ratio will be high, and lenders may view you as…

When you apply for a mortgage, your lender will do some quick math to figure out how much of a loan you can afford. Your lender will consider many factors, and one of the most important ones is your debt-to-income ratio. It is usually shortened to DTI, and understanding this formula can help you better understand how big of a house you can afford.  An Overview Of A DTI Your DTI represents the amount of money you spend compared to the amount you make. Your lender is going to have very strict DTI requirements when deciding whether you can be…