---
title: Debt-To-Income
description: Debt-To-Income
---

[HomeLend Mortgage Blog](https://blog.homelend.net/blog)

# [Debt-To-Income](https://blog.homelend.net/blog/2019/12/debt-to-income-2)

 Written by [Sara Livecchi](https://blog.homelend.net/blog/author/sara-livecchi) | Dec 24, 2019 5:11:58 PM

During the loan application process, you may discuss your debt-to-income ratio and how it impacts your ability to qualify for a loan. 

Often abbreviated as DTI, this number is a comparison of how much you earn per month to your debt per month. It’s represented as a percentage.

## How Do I Calculate My DTI?

1. Take the sum of all your monthly bills
2. Divide by your gross monthly income
3. Turn into a percentage

### Example:

**Monthly Bills:**

$1,300 rent + $300 car payment + $100 student loan payment + $25 min. credit card payment = $1,725

**Monthly Gross Income:** $5,834

1,725 / 5,834 = 0.296

**Percentage:**  
29.6% = DTI Ratio

## How Does My DTI Impact My Creditworthiness?

A Lower DTI is generally regarded by lenders as more favorable. It makes you look like you’re a responsible spender and that you have enough cash after paying your bills to save or spend.

If your DTI is under 35%, you’re in a great place. Good job! Treat yourself to some extra dessert or something fun.

Between 35% and 49%, you’re doing well but with room to improve. At this rate, you may not be able to sustain your finance if something unexpected were to hit your finances, like needing a new hot water heater, or buying new tires for the car. It’s best to have the financial flexibility that allows you to be ready for anything.

A DTI at or above 50% raises some red flags for lenders. You don’t have a ton of flexibility after paying your bills, so money might feel like a source of stress for you. Lenders will probably limit your loan options accordingly.

*Note: Having a high DTI ratio isn’t always a bad thing. If you are a recent grad and are aggressively paying towards your loans, for example, you are working towards building solid credit while also attacking a huge debt. This high DTI would only be temporary.*

## How Can I Lower My DTI?

### Increase your monthly income

If you’re not due for a raise, then this one isn’t going to happen on its own. Our best suggestions are to look for alternative sources of income like finding a second job. There are ways to get creative, though. If you’re still holding on to your old college textbooks, they’re worth throwing on the internet for a few bucks. You can also make money online doing things like transcribing audio or taking surveys. These won’t turn your debt around, but they’re easier than finding another job.

### Decrease your debts

Look at your monthly debt burdens. Are all of them necessary? (Do you need Netflix, Hulu, HBO Go, Peacock AND Disney+? No, you don’t. Use your cousin’s login.) If rent or a mortgage is a huge part of your debt, consider downsizing to a smaller apartment or refinancing for a lower interest rate. You  
can’t live large if you aren’t making those big bucks (yet!).

Craving more? Get in contact with a professional today to get your specific questions answered. Our expert loan officers are available to guide you through the loan process.

[Apply Now](https://apply.homelend.net/#/milestones)

[View full post](https://blog.homelend.net/blog/2019/12/debt-to-income-2)

```json
{
  "@context" : "http://schema.org",
  "@type" : "BlogPosting",
  "author" : {
    "@type" : "Person",
    "name" : "Sara Livecchi"
  },
  "dateModified" : "2022-04-01T13:13:29.564Z",
  "datePublished" : "2019-12-24T17:11:58Z",
  "headline" : "Debt-To-Income",
  "image" : {
    "@type" : "ImageObject",
    "height" : 3264,
    "url" : "https://cdn2.hubspot.net/hubfs/4981999/shutterstock_1160497384.jpg",
    "width" : 4896
  },
  "mainEntityOfPage" : "https://blog.homelend.net/blog/2019/12/debt-to-income-2",
  "publisher" : {
    "@type" : "Organization",
    "logo" : {
      "@type" : "ImageObject",
      "height" : 60,
      "url" : "/hs/hsstatic/content_shared_assets/static-1.4092/img/default-amp-logo.png",
      "width" : 60
    },
    "name" : "HomeLend Mortgage Blog"
  }
}
```