Before a lender approves any mortgage application, the underwriting department verifies one's ability to repay the loan first. The mortgage isn't the only payment that a borrower will have - there are car loans, student loans, personal loans, credit card debts and more. The lenders consider all the money owed to other lenders to calculate one's debt-to-income (DTI) ratio. These minimum monthly payments are added together with the monthly mortgage payment and divided by one's gross monthly income to determine this ratio. For example, a monthly mortgage payment of $1,000 plus $2,000 in other monthly debt obligations (credit card, loans, etc.) will be divided the gross monthly income of $10,000. So $3,000 in monthly payments divided by $10,000 is 0.3 or a 30% debt-to-income ratio. Between the loan-to-value (LTV) and the debt-to-income ratio, if deemed a high risk, one will likely pay a higher interest rate.

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## What Debts Are Calculated in DTI Ratios

Mortgage payments (Principal, Interest, Taxes and Insurance) are contained in the DTI calculation, but auto insurance and life insurance payments, 401(k) contributions, income tax deductions and college or private school tuition payments are not.## Can Mortgages Come Off One’s DTI (Debt To Income) Ratio

No. PITI (Principal, Interest, Taxes, Insurance) is the sum components of a mortgage payment. This calculation is used in conjunction with a 15-year to 30-year stress test to obtain a DTI Ratio.## How Do Deferred Student Loans Affect One's DTI (Debt To Income) Ratio

Only when a loan is reporting as a $0 payment to the credit bureaus will it not affect a debt-to-income ratio. If it is reporting as deferred then a percentage of the balance (i.e. 0.5% or 1%) is used to determine the monthly minimum payment. If a ...## What Is A Front-End Ratio / Housing Ratio

A front-end ratio or housing ratio divides one's total monthly mortgage payment, also known as a PITI (Principal, Interest, Taxes and Insurance), by one's monthly income. For example a monthly mortgage payment of $1,000 with a gross monthly income of ...## Can Someone Buy A Home With No Reportable Income (Missing 2 Years of Income Statements)

Yes, it’s possible to get a home loan without verifiable / reportable / taxable income (primary residence only); however, it requires a great credit score, a large down payment, low debt-to-income ratio, and substantial net worth / assets to support ...