For homebuyers1 min read
Debt-to-income, explained
One of the numbers that most affects what you qualify for, what goes into it, and how to strengthen it before you apply.
What it measures
Your debt-to-income ratio, or DTI, compares the monthly debt payments you already have to your gross monthly income. Lenders use it to gauge how much room a new mortgage payment leaves in your budget.
What counts
The debts that count are the recurring ones on your credit report: things like car loans, student loans, minimum credit-card payments, and the new housing payment. Everyday expenses like groceries and utilities aren't part of the calculation.
Strengthening it
Paying down a balance or holding off on a new loan before you apply can lower your DTI and widen your options. Since programs weigh it differently, it's worth asking your loan officer where you stand before you make a move.
Questions about your own file?
A loan officer licensed in your state can run your actual numbers.
Keep reading
For homebuyers1 min read
Preparing for pre-approval
What a loan officer looks at, the documents worth gathering early, and how pre-approval differs from pre-qualification.
For homebuyers1 min read
How your credit affects your loan
What lenders look at beyond the score, how credit shapes your options, and the moves to avoid once you're shopping.
For homebuyers1 min read
How much down payment you need
The 20% figure is a myth for most buyers. Here's what the low-down-payment programs allow and the trade-offs to weigh.
This guide is general information, not financial advice, a quote, or loan terms. Program availability and qualification vary. ALCOVA Mortgage LLC, NMLS #40508 (www.nmlsconsumeraccess.org). Equal Housing Lender.