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How can I lower my DTI?
How can I lower my DTI?
Mortgage lenders look at your DTI to determine how much home you can qualify for. The DTI is the debt of your income. Lenders determine how much of your income goes towards paying off debt and is measured by a percentage. The higher the percentage, the higher the risk you are to the bank. In order to qualify for a loan, it is best to keep that DTI percentage between 45% to 50%.
You should include in your DTI your revolving debt: credit cards, your monthly payments, all your installment debts: car loans, student loans, jewelry, furniture, electronics, anything your finance using your credit as a guarantee, your mortgages, if you have IRS payments, child support.
You should not include in your DTI your rent, cell phone bill, health insurance, life insurance, car insurance, do not include any bill that is not personally guaranteed by your credit.
There are 4 ways to lower your debt to income ratio; first: lower your purchase price, it will bring you debt to income ratio down because your payment will drop; second: bringing a bigger down payment, the bigger down payment will drop your monthly payment; third: add a co-signer; fourth: pay off some debt.
These 4 ways will help you qualify for homeownership by lowering your DTI. If you need more advice about your debt to income ratio, you know you can call me, I will make it simple and safe!
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