Debt to Income Ratios
Understanding debt-to-income (DTI) ratios is crucial in the mortgage process. Your DTI ratio compares your monthly debt payments to your monthly gross income. Lenders use this ratio to evaluate your ability to manage monthly payments and repay borrowed money. Typically, a lower DTI ratio indicates better financial health and a higher likelihood of loan approval. Aim for a DTI ratio of 36% or lower, although some programs may allow higher ratios.
