What is the debt to income ratio, and why do you care when you’re trying to buy a house? How much debt you have greatly influences how much a lender is willing to lend to purchase a home. Ideally you have a huge reportable income with very low debt — that gives you the best debt to income (DTI) ratio, and makes you the most lendable.
Here we talk about front end ratio, back end ratio, gross income, recommended ratios, reported income, write offs, and working out a plan with your lender. Remember that it takes a higher amount of income to offset every dollar of debt.
1:01 – I make lots of money, but when I talk to a lender…I don’t qualify for a house.
1:59 – Lenders use ratios. “It’s not about the amount of money that’s left. over, it’s the percentage of money that’s left over!” — Jason Christiansen
2:26 – Gross income – yearly income before anything gets taken out.
2:58 – Front-End ratio – mortgage to income ratio.
3:19 – Back-End ratio – all debt to income ratio.
3:32 – Recommended ratios: 33% front end and 50% back end.
3:49 – A lender doesn’t want to put borrows in a situation where they cannot repay.
4:49 – “Reported” income: pay that gets reported to the IRS for taxes.
5:50 – Write offs make it hard to qualify for a loan.
7:30 – Let your lender know what your plans are.
8:01 – It takes a disproportionately high amount of income to offset new debt.
9:19 – What’s we learn today? summary.
9:39 – Like, comment, and subscribe.
10:00 – bloopers
*No write offs were harmed in the filming of this real estate discussion.
Please contact us to tell us you love us, you want to hire us! Call or text:
Realtors with Hive Collective at Presidio Real Estate:
Tyler Cazier: 801-210-0230
Aric Wiszt: 801-228-7687
Lender with Elite Team at Security Home Mortgage:
NMLS: 178787
Jason Christiansen: 801-669-7271
NMLS: 240472
A Production with Security Home Mortgage’s Jason Christiansen, and Hive Collective at Presidio’s Tyler Cazier and “Mr. Suit” Aric Wiszt.