A Debt-to-Income (DTI) ratio is a financial metric used by lenders to determine a borrower's ability to repay a loan. It is calculated by dividing the borrower's total monthly debt payments by their gross monthly income.
Why is the DTI ratio important for homebuyers?
The DTI ratio is important for homebuyers because it helps lenders assess their ability to manage their monthly debt obligations and determine how much they can afford to borrow for a mortgage loan.
What is a good DTI ratio for a mortgage loan?
A good DTI ratio for a mortgage loan is typically below 43%. Lenders prefer borrowers with lower DTI ratios as it indicates a lower risk of defaulting on the loan.
