How Can You Calculate Your Own DTI?

If you’re like many people buying a condo or loft for sale in Downtown Los Angeles, you know that a lender will look at your debt-to-income ratio, or DTI.

But there’s a way to figure out your own DTI so you know exactly what your lender will be looking at.

First, you need to know that most lenders want you to have a debt-to-income ratio of 36 percent or less. That’s the “gold standard” in lending. That means that 36 percent of your income (or less) goes toward your monthly obligations and the rest of your income is left over.

Lenders look at lower DTIs more favorably than they look at higher DTIs. It’s a measure of financial health, according to most lenders. They’ll feel more comfortable that you’ll be able to make your payments without defaulting if your DTI leaves “wiggle room” in your budget.

You can calculate your own DTI by adding up all your monthly debt, including:

Loans
Your current mortgage payment
Your minimum monthly credit card payments
Other obligations you have to pay for monthly

Take that figure and divide it by your monthly gross income. That’s the money you make each month before taxes.

Let’s say you pay $1,000 per month in debt obligations, which includes your rent, car payment and credit card payments. If you make $4,000 per month before taxes, that makes your DTI 25 percent.

However, if you pay $2,000 per month in debt obligations and make $4,000, your DTI goes up to 50 percent.

Are You Buying a Loft or Condo for Sale in DTLA?

Call us at 213-254-7626 or get in touch with us online to start exploring your options when you want to buy a loft or condo in downtown Los Angeles.

While you’re here, check out our: