Franklin Loan Center

We treat your loan like it's our own™.

NMLS #237653

© 2017 Franklin Loan Corporation Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, 4131316  

NMLS Consumer Access

FRANKLIN NEWSFLASH: The Debt To Income Ratio, and Its Effects to Your Borrowing Power

In today’s market, banks want to be sure that you can afford a monthly housing responsibly along with all other debt considered in the home loan approval on a monthly basis before considering on giving you a loan. Gauging a responsible/affordable threshold is why the Debt-to-Income (DTI) was established.

So, what is the debt-to-income ratio?

DTI thresholds can vary but the debt to income ratio represents a percentage of your gross income that is spent on TOTAL debt payments which often include all types of loans, mortgages, credit card payments and even child support.

The Debt-to-Income ratio measures affordability against the loan program specific threshold…

If you want to measure affordability and want to calculate the debt to income ratio, just divide your total debt by your gross income, and multiply to 100 (multiplying by 100 indicates the percentage). For example, if you make $3500 per month and have a total of $1330 in monthly debt, the Debt-to-income ratio is 38%.

Ratios:

  1. Total Housing Debt Ratio

  2. Total Debt-to Income Ratio

Housing Ratio = Income divided by total housing payment

  1. Total housing payment = principle + interest + taxes + insurances + Homeowner Association fees (if applicable)

Total Debt to income (DTI) = income / total debt

  1. TOTAL DEBT = Total housing payment (principle + interest, taxes, insurances) and all other revolving (i.e. credit cards) and Installment (i.e. car payments) debts.

Franklin Loan Center Corporate  44-800 Village CourtPalm DesertCA  92260 Office:  (760) 779-8100

CalBRE: # 001069837 NMLS: #237653 © 2017 Franklin Loan Corporation Licensed by the Department of Business Oversight under the California Residential Mortgage Lending Act, 4131316  

NMLS Consumer Access

Privacy Policy