Real Estate Community Forum

I've heard many people say that mortage companies will examine your debt to income ratio to determine if you are approved for a mortgage. How is this figured out? Are they looking at your debt to income ratio for the entire year or month? Also what type of debts are they looking at? Are they intersted in your gross income or net income?

A debt to income ratio provides a good indication of how strong your financial situation is on a day to day basis. Simply gather all your billing statements. This does not include your mortgage, rent, utilities, taxes as debts.

Next, determine your monthly income. This includes your annual gross income and any additional income you receive.

Then divide your monthly payments by your total monthly income. The answer will give your debt to income ratio.