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Valued Member
organic_cupcake
Posts: 30
Registered: ‎04-20-2008
0

What is considered a good debt to income ratio

Hello All!
 
What is considered a good debt to income ratio?
 
I tried to figure mine out and came up with 13%. My mortgage guy said I have a really low debt to income ratio and that could work in my favor with a mortgage loan. I really only have a car loan (with my husband) and a student loan and two very very small CC ( under $150.00 each).
 
We are applying for a small mortage for our debt to income ratio according to the morgage guy. Is he right? will applying for a smaller mortgage for our income help us out a little?
 
Thanks!!
And the cupcake said "when I say Bite ME, I mean it!
Regular Contributor
Physicist
Posts: 164
Registered: ‎07-14-2008
0

Re: What is considered a good debt to income ratio

Every lender has a differnt policy, but they want to see something smaller than 36% (including mortgage). But if you have a high income, they may go up to more to 40-45% or so.
Super Contributor
DallasLoanGuy
Posts: 6,335
Registered: ‎07-03-2007
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Re: What is considered a good debt to income ratio



Physicist wrote:
Every lender has a differnt policy, but they want to see something smaller than 36% (including mortgage). But if you have a high income, they may go up to more to 40-45% or so.


inaccurate. someone with a 'high income' doesnt get special privileges. if you have large assets, that can indeed compensate for a hight dti



* While I try to visit the forum often, please feel free to contact me directly with a link to your post if I fail to answer a follow up question.

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Super Contributor
DallasLoanGuy
Posts: 6,335
Registered: ‎07-03-2007
0

Re: What is considered a good debt to income ratio



organic_cupcake wrote:
Hello All!
 
What is considered a good debt to income ratio?
 
I tried to figure mine out and came up with 13%. My mortgage guy said I have a really low debt to income ratio and that could work in my favor with a mortgage loan. I really only have a car loan (with my husband) and a student loan and two very very small CC ( under $150.00 each).
 
We are applying for a small mortage for our debt to income ratio according to the morgage guy. Is he right? will applying for a smaller mortgage for our income help us out a little?
 
Thanks!!



dti is one factor. along with cash reserves and credit and length of employment, ect. certainly, a low dti will be seen as a positive.



* While I try to visit the forum often, please feel free to contact me directly with a link to your post if I fail to answer a follow up question.

* Lending across the entire 'Great State of Texas' since 2004
New Visitor
wilpri
Posts: 1
Registered: ‎10-12-2011
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Re: What is considered a good debt to income ratio

I can't believe there are people out  there with two-thirds of their income as extra money to spend.  I'm shocked.  36%?  I honestly don't know anyone who carries a debt including their mortgage/rent of only 36% of their income, except drug dealers.

Moderator Emeritus
llecs
Posts: 32,869
Registered: ‎08-04-2007
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Re: What is considered a good debt to income ratio


wilpri wrote:

I can't believe there are people out  there with two-thirds of their income as extra money to spend.  I'm shocked.  36%?  I honestly don't know anyone who carries a debt including their mortgage/rent of only 36% of their income, except drug dealers.



Remember, that two-thirds isn't necessarily excess cash that's laying around. You'll have other expenses not factored into DTI like food, clothing, gasoline, utilities, insurances, kid's schooling, vacation, travel, misc., etc.

Valued Member
Trondul
Posts: 31
Registered: ‎04-14-2011
0

Re: What is considered a good debt to income ratio

That's 36% of gross (pre-tax, pre-insurance, pre-401k, etc.) income.  Just take your yearly salary and divide by 12.  36% of that will be closer to 2/3 of your take home probably.

jcb
New Visitor
jcb
Posts: 1
Registered: ‎07-17-2012
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Re: What is considered a good debt to income ratio

We do...and with three kids on one income...DTI is 26%.  We live nicely in a suburb of Minneapolis, and we enjoy life.  Why be house-poor?

Moderator Emeritus
webhopper
Posts: 7,225
Registered: ‎09-16-2011
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Re: What is considered a good debt to income ratio

[ Edited ]

My husband and I have a total debt ratio of 32.6%

 

This includes 2 mortgage payments for two separate homes, one car payment, and one student loan payment. We have anywhere from 70k-100k in house equity depending on the month and our local market. We also have over 30k in vehicle equity, we both drive fairly new vehicles that are paid for, and we have a truck, which still has a note.  I also have about 75k in retirement investments...

 

For me, I am very conservative due to my mistakes in the past.  My husband is very conservative because he really doesn't care about posessions, other than guns. He has a gun collection worth about 40kish  Having a lot of available discretionary income is great and I would never go back to living on the edge.  I have always bought used vehicles instead of new. I've always done without the latest fashions... Our clothing budget is less than $800 dollars a yr.  My husband loves to hunt, we don't buy meat at the grocery store.  

 

also, having the two houses poses greater financial risk than having just one mortgage to pay for.  So we basically budgeted so that we can make both mortgage payments even if both sides of the duplex are vacant.

 

I agree that there is no point in being house poor and stressed out.  Your family and your marriage will thank you for choosing less than what mortgage brokers tell you you can "afford"

 

 

We don't look at this as extra money to "spend"  We look at this as extra money to save for retirement and donate to charity or churches.  Last year we donated $500 to Toys for Tots and $200 to the local food bank to provide turkeys for thanksgiving to the shelter.

 

My husband is 34, and I'm 30... my goal is to be a millionaire several times over one day. Joey doesn't care how much money we have, since he has enough guns and ammo to fend off the zombie apocolypse.   :/  ROFL  (I'm not kidding about the last statement)


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Valued Contributor
tooleman694
Posts: 2,297
Registered: ‎08-25-2011
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Re: What is considered a good debt to income ratio

When I close on my home, my DTI will be around 45 percent.

 

Still have lots of extra cash around to do whatever and save.


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