Mmastodon BusinessPersonal Finance first seen 5 d ago, last 2 d ago, peak #2

Lenders Look at Debt-to-Income Ratio First

Original: What's your debt-to-income ratio? It's the number lenders check first. DTI = monthly debt payments ÷ gross monthly incom

A personal finance explainer is making the rounds detailing how lenders calculate debt-to-income ratio before approving loans. The formula divides monthly debt payments by gross monthly income. An example with $6,000 gross income and $2,350 in debt payments yields a 39.2% DTI. Under 36% is considered good, 36-43% manageable, and above 43% risky for borrowers seeking mortgages or credit.

Why now: People are focused on borrowing costs and loan approval standards, making practical credit metrics highly shareable.

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Evidence

• What's your debt-to-income ratio? It's the number lenders check first. DTI = monthly debt payments ÷ gross monthly income. Example: $6,000/mo gross. Rent $1,600 + car $380 + student loan $250 + card minimums $120 = $2,350 → 39.2%. Under 36% is good, 36-43% manageable, 43%+ is… · smartbudgetsheets · 2

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