Debt To Income Ratio

Measures your future monthly housing expenses and monthly debts (monthly car payments, monthly credit card payments, and other monthly loan payments such as student loans) in relation to your monthly income. Lenders generally figure you shouldn't spend more than about 33 to 40 percent of your monthly income on housing expenses. The other debts may include, but are not limited to car payments, credit cards, alimony, child support, and personal loans. This ratio is commonly used to see if the borrower has the capacity to repay the debt. The lower the ratio, the better it is.

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