Your debt-to-income (DTI) ratio is the percentage of your monthly income that goes towards paying down debts. 💸
It’s an important number to calculate when you’re considering taking out a loan because it can impact your ability to qualify.
To calculate your DTI, simply add up all of your monthly debt payments and divide them by your gross monthly income. For example, if your monthly debt payments total $2000 and your gross monthly income is $5000, then your DTI would be 40%.
If you’re not sure what debts to include in the calculation, a good rule of thumb is to use any fixed payments that you make each month, such as car loans, credit cards, student loans, and mortgages.
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