If you’re like most people buying a loft or condo in downtown Los Angeles, you know you’ll need a mortgage loan to get the cash – but in order to do that, you have to have the right debt-to-income ratio, or DTI.
But what is DTI, and how can you figure out what yours is?
What is DTI When You Buy a Loft or Condo in Downtown LA?
Your debt-to-income ratio is a comparison of how much debt you have to pay for each month versus how much money you bring in.
Lenders want you to see it under 41 percent, although really, if it’s under 29 percent, it’ll probably be a lot easier for you to get a loan.
Here’s how you figure out your DTI before you apply for a loan:
- Figure out a mortgage amount. You can do it using a mortgage calculator or you can throw out a number that’s similar to what you’re paying now in rent.
- Determine how much you’re paying in monthly debt obligations.
- Add those two numbers together.
- Divide your monthly debt by your gross income (that’s how much you make before taxes).
The number you get is your debt-to-income ratio.
The lower your DTI is, the more favorable terms most lenders will be willing to give you. It may be a lot easier for you to get a mortgage loan when your DTI is 25 percent than it would be if it was 38 percent. (Remember, though, there are other factors at play as well – including your credit score.)
Are You Buying a Loft or Condo 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.
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