inception-app-prod/NTk4NmJlMDktMzBlOS00MWVhLWFlYzItOTBmZjAzNDJlM2Ey/content/2021/02/logonamecenteredwhite.png
  • Home
  • Sell
  • Our Agents
  • Resources
    • Debt to Income Ratio what is it
    • Lease with Right to Purchase
  • Property Management
  • Blog
inception-app-prod/NTk4NmJlMDktMzBlOS00MWVhLWFlYzItOTBmZjAzNDJlM2Ey/logo/2019/01/LFR Logo Official 2.1.17 1000px.png
503-278-5334
info@libertyfirstrealty.com
Sign In
Sign Up
inception-app-prod/NTk4NmJlMDktMzBlOS00MWVhLWFlYzItOTBmZjAzNDJlM2Ey/content/2021/02/logonamecenteredwhite.png
  • Home
  • Sell
  • Our Agents
  • Resources
    • Debt to Income Ratio what is it
    • Lease with Right to Purchase
  • Property Management
  • Blog
inception-app-prod/NTk4NmJlMDktMzBlOS00MWVhLWFlYzItOTBmZjAzNDJlM2Ey/content/2021/02/logonamecenteredwhite.png

Debt to Income Ratio what is it

What is a debt-to-income ratio? Why is the 43% debt-to-income ratio important?

Answer: Your debt-to-income ratio is all your monthly debt payments divided by your gross monthly income. This number is one way lenders measure your ability to manage the payments you make every month to repay the money you have borrowed.


To calculate your debt-to-income ratio, you add up all your monthly debt payments and divide them by your gross monthly income. Your gross monthly income is generally the amount of money you have earned before your taxes and other deductions are taken out. For example, if you pay $1500 a month for your mortgage and another $100 a month for an auto loan and $400 a month for the rest of your debts, your monthly debt payments are $2000. ($1500 + $100 + $400 = $2,000.) If your gross monthly income is $6000, then your debt-to-income ratio is 33 percent. ($2000 is 33% of $6000.)

Evidence from studies of mortgage loans suggest that borrowers with a higher debt-to-income ratio are more likely to run into trouble making monthly payments. The 43 percent debt-to-income ratio is important because, in most cases, that is the highest ratio a borrower can have and still get a Qualified Mortgage.

There are some exceptions. For instance, a small creditor must consider your debt-to-income ratio, but is allowed to offer a Qualified Mortgage with a debt-to-income ratio higher than 43 percent. In most cases your lender is a small creditor if it had under $2 billion in assets in the last year and it made no more than 500 mortgages in the previous year.

Larger lenders may still make a mortgage loan if your debt-to-income ratio is more than 43 percent, even if this prevents it from being a Qualified Mortgage. But they will have to make a reasonable, good-faith effort, following the CFPB’s rules, to determine that you have the ability to repay the loan.

Have a question?

Send
Submitting
Succes! Your message was sent!
Oops! Error occurred.

About

inception-app-prod/NTk4NmJlMDktMzBlOS00MWVhLWFlYzItOTBmZjAzNDJlM2Ey/logo/2019/01/LFR Logo Official 2.1.17 1000px.png
Our Support Team
Real estate
O: 503-278-5334
info@libertyfirstrealty.com
Real Estate Experts

Search Listings

Enter city, zip, neighborhood, address…
Loading in progress…
No results found
Type in anything you’re looking for
Search

Office

Liberty First Realty, LLC
8215 SW Tualatin Sherwood Rd Suite 200Tualatin
Oregon 97062
503-278-5334
info@libertyfirstrealty.com

About us

  • Home
  • Sell
  • Popular Searches
  • Investors
  • Our Agents
  • Resources
  • Property Management
  • Blog

Consumer Protection & Privacy

  • Licensed in Oregon
  • Accessibility
  • DMCA Compliance
For ADA assistance, please email compliance@placester.com. If you experience difficulty in accessing any part of this website, email us, and we will work with you to provide the information you seek through an alternate communication method.
inception-app-prod/NTk4NmJlMDktMzBlOS00MWVhLWFlYzItOTBmZjAzNDJlM2Ey/content/2021/02/logonamecenteredwhite-2.png

© 2023 All rights reserved

Created with Placester

Sign in

Sign In
Forgot your password?
Create an account
You have been successfully logged in
The page will reload automatically.
Go to the homepage
Sorry something went wrong
Login or password are incorrect. Please try again.
Try again

Sign Up

Your password needs:
At least one uppercase letter
At least one special symbol or number
At least 8 characters
Sign Up
Already a User? Sign In
You have been successfully registered
Please check your email.
Go to the homepage
Sorry something went wrong
Please try again.
Try again

Reset password

Enter your email address

Reset password
Return to Log In
Reset password email has been sent.
Go to the homepage
Sorry something went wrong
Please try again.
Try again

Change password

Your password needs:
At least one uppercase letter
At least one special symbol or number
At least 8 characters
Change password
Sign Up
Your password has been successfully reset.
Go to the homepage
Sorry something went wrong
Please try again.
Try again

Account verification in progress

Please wait...

Account Verified!
The page will reload automatically.
Go to the homepage
Verify your email address
In order to log in to your account, you need to confirm your email address. Please check your inbox!
Go to the homepage

Share this listing

Copy Link