Blog Entries Tagged: qualified mortgages HOME LOANS DEBT TO INCOME RATIO Posted by Greg Hancock Debt to Income Ratio - The 43% Target Before a first time buyer, or any home buyer sets out to start viewing properties, getting pre-approved is one of the crucial first steps, but examining your debt-to-income ratio is best done before applying for a home loan. Why is the debt-to-income ratio of 43% such an important percentage and factor? This ratio speaks to a home buyer’s financial capacity not so much in terms of buying a home but capacity to faithfully pay on the mortgage and not go into default – as much a concern for the lender as it should be for the home buyer. For purposes of getting pre-approved for a mortgage, your debt-to-income ratio is calculated simply by adding up all your monthly debt payments and then divide the total by your gross monthly income. This is how mortgage lenders measure a home buyer’s ability to successfully manage monthly mortgage payments and re...
