How To Calculate Debt To Income Ratio For Mortgage? | DTI Explained - YouTube

hey so if you're curious to know how you can  calculate your dent income ratio while you found  

the right video hey daniel q intro please hey  how's it going friend juan pablo here now on this  

channel if you're new we like to discuss three  major pillars to financial freedom first pillar  

personal finance that relates to everything  from budgeting to credit repairs to calculating  

your ratios and all that good stuff we also  like to discuss funding having a repeatable  

source of investment capital and last  so not least real estate investing  

we'd like to focus on multi-units and multi-family  properties to get you closer to financial freedom  

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all right guys so without further ado let's dive  into the topic so this is the share hub this is  

pretty much um useful for people people within our  community members or students so we have a ton of  

resources that we like to share with them so i'm  just going to show you one additional resource on  

a previous video which i'll drop here just check  the video below i mentioned about how to break  

down and calculate a mortgage so this video i'm  going to share with you how to calculate your debt  

to income ratio so this is more of a personal  finance pillar that i'm going to discuss today  

so let's jump into it all right so you click on  this link and it will populate which is up here  

already but i'll just do it again now this is the  debt to income ratio calculator through bank rate  

now this is really good now what i'm going to do  is i'm going to read some of the stuff because  

you know they could say better than i could  but you can easily find this stuff online  

simple calculators so i like to use a lot of some  calculators we have that are a tad bit more robust  

like deal analyzers you might not be able to find  those online but in regard to simple calculations  

like your debt to income ratio calculated mortgage  bank rate is a great resource let's dive into it  

so first thing first what is a dti and why is it  important well i'm just going to read this here a  

debt to income ratio is derived by dividing  your monthly debt payments by your monthly  

gross income not net but gross okay this ratio  the ratio is expressed as a percentage and lenders  

mainly mortgage lenders use it to determine  how well you manage your debts and if you can  

afford to repay the loan because if they happen  to see where your personal finances are concerned  

that you're somewhat over leveraged let's say  you're receiving a thousand dollars a month gross  

in income a thousand dollars is you know just  making math easy well let's say 10 000 that's  

more reasonable right let's say you're making 10  000 a month in gross income from your nine to five  

but let's say 7 000 is going out towards your  debt payments covering things such as rent  

mortgages student loans personal loans auto loans  credit card payments child support alimony all of  

these things then in that scenario 7 000 divided  by 10 000 that's a 70 dti which is extremely high  

most mortgage lenders they like to see it below 50  anywhere between 40 to 50 percent is is what they  

typically gauge is to see if you're able to pay  repay the debts their mortgage right that's all  

they care about is your ability to repay so they  want to make sure you're not over leveraged with  

debt of course if you have a debt to income ratio  below 40 then that's perfect that means you're  

doing something major your high income earner  or limited expenses or debts so that's excellent  

good that's excellent that's really good okay now  this should show you the calculations let's say  

we're doing here let's say you added up all your  your monthly debts and that's one thing you should  

do you're just your minimum payments we're not  talking about the loan amount but your minimum  

payment amount so you should gather all your  credit cards and see okay what is the minimum  

payment on my bank of america my wells fargo on my  chase okay the total there is 300 minimum payment  

you want to say okay now i have a mortgage how  much is my mortgage well my mortgage is a thousand  

so that's 1300 right there and let's say you  have student loans let's say your student loan  

is uh 200 a month so you're at 1500 right there  right now let's see if you have another loan let's  

say you have a personal loan you got a computer  or what have you and you're you're spending 150 on  

there on that so right now you're at 16.50 okay so  monthly debt we're going to calculate it in here  

6.50 now let's say your gross  income you receive from your job  

so gross is not your net okay your gross meaning  before taxes are taken out let's say you receive  

3 000 a month and gross okay let's say you're  you're entry level you're just getting started  

so it's three three thousand so your debt  to income ratio in that scenario will be 55  

okay and as i share the lower your income the  better now many different mortgage lenders have  

different criteria some might say they want this  percentage or that percentage but that's the point  

of reaching out to them to say to the tax hey  based upon because i can give you a a number but  

at the time it's recording it may change by the  time you watch this video right you might watch  

this video months from when i've actually created  this video so things can change so you just want  

to make sure you go to the go to the source reach  out to a mortgage lender and just ask them hey  

what qualifies me in regard to my dti what  percentage are you guys looking for okay and here  

is a good question here what is the ideal is this  here they typically like a front end to be no more  

than 28 and the back end including all expenses  to be 36 so i said somewhere between 40 or 50 you  

know even lower is better but it depends on the  type of mortgage so you see here for conventional  

mortgages backed by fannie and freddie these are  the secondary mortgage markets lenders now accept  

the dti ratio as high as a 50 okay so it depends  on the type of mortgage that you're looking for  

all right it all varies okay but if you want  more information about debt to income ratios  

what i'll do is i'll place this link in the  description as well so you guys can see read this  

because you might have questions about the front  end the back end uh the ideal how's it impact your  

credit so there's a great resource here it's on  bankrate.com so i'll put this in the description  

as well all right guys and uh if you're interested  in learning more about how you can qualify for  

multi-unit properties or how to get get  your hands on some so that way you can start  

embarking upon that journey towards financial  freedom then all you have to do my friend is  

just check the link below in the description  okay we have a free training that shows you  

how to get multi units whether it's inside your  market or outside using opm other people's money  

all right guys as always this is to your success  continue to earn passively live passionately peace

you