Comments on: Your Debt-to-Income Ratio: What It Is and Why You Should Care http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/ personal finance tips, tricks, and commentary Mon, 13 Feb 2012 18:22:18 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: SDub http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-242882 SDub Sat, 27 Aug 2011 00:03:51 +0000 http://www.fivecentnickel.com/?p=3784#comment-242882 Curious to see how Nelson made out with the home buying with a backend at 43%... Curious to see how Nelson made out with the home buying with a backend at 43%…

]]> By: mary http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-226402 mary Sun, 15 May 2011 11:08:55 +0000 http://www.fivecentnickel.com/?p=3784#comment-226402 only owned 24.193.00 on the home in 1999 have paid over34,000.00 or more how do I figure the % I think was 10% then when can I know if the house is paid for? only owned 24.193.00 on the home in 1999 have paid over34,000.00 or more how do I figure the % I think was 10% then when can I know if the house is paid for?

]]> By: Nelson http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-140563 Nelson Sat, 20 Feb 2010 14:00:34 +0000 http://www.fivecentnickel.com/?p=3784#comment-140563 I'm in the market right now to try and qualify for a mortgage. I've just paid off all my crdit card bills, but I still have my car payment and student loans. A loan advisor told me that they would have to factor my student loans into the DTI, even though they are currently in forbearance. Because of this, my back-end DTI is at about 43%, even though I am only making car payments at this time. Are there any loan options out there that can get me qualified with only 3% down (i.e. FHA)? My intention was to put 20% down to forego PMI (thinking that they wouldn't count my student loans), but because of this I just ended up paying off all my credit cards with the intended down payment money, which will only leave me with a 3% max down payment that I can afford right now for a place. I wanted to get a place before Apr 30th to qualify for the Obama first-time home buyers credit, but now I don't think that's possible (or is it)? Any advice would be greatly appreciated. I’m in the market right now to try and qualify for a mortgage. I’ve just paid off all my crdit card bills, but I still have my car payment and student loans. A loan advisor told me that they would have to factor my student loans into the DTI, even though they are currently in forbearance. Because of this, my back-end DTI is at about 43%, even though I am only making car payments at this time. Are there any loan options out there that can get me qualified with only 3% down (i.e. FHA)? My intention was to put 20% down to forego PMI (thinking that they wouldn’t count my student loans), but because of this I just ended up paying off all my credit cards with the intended down payment money, which will only leave me with a 3% max down payment that I can afford right now for a place. I wanted to get a place before Apr 30th to qualify for the Obama first-time home buyers credit, but now I don’t think that’s possible (or is it)?

Any advice would be greatly appreciated.

]]> By: FinanciallySmart http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-139448 FinanciallySmart Sun, 31 Jan 2010 02:58:43 +0000 http://www.fivecentnickel.com/?p=3784#comment-139448 @Charlie Boy I am in total agreement with you. One can give you an advice but its up to the individual to know that it is he/she who will be struggling for years and so in preventing this choosing one that is easier is better. Debt should not be a yearly occurrence but one that we should avoid. @Charlie Boy I am in total agreement with you. One can give you an advice but its up to the individual to know that it is he/she who will be struggling for years and so in preventing this choosing one that is easier is better. Debt should not be a yearly occurrence but one that we should avoid.

]]> By: BG http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138828 BG Tue, 19 Jan 2010 20:12:04 +0000 http://www.fivecentnickel.com/?p=3784#comment-138828 #29) We'd have to _quadruple_ our monthly mortgage payment to hit 57% DTI. Either you are earning a ton more than me, or you must be superman to afford that kind of rent. Wow. #29) We’d have to _quadruple_ our monthly mortgage payment to hit 57% DTI. Either you are earning a ton more than me, or you must be superman to afford that kind of rent. Wow.

]]> By: Matt Jabs http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138782 Matt Jabs Mon, 18 Jan 2010 19:26:54 +0000 http://www.fivecentnickel.com/?p=3784#comment-138782 @Terry #28: Yes, but only if their base rent and income are exactly the same and renter B's rent is higher because of a built-in "utilities included" rent payment. Regardless, the difference here is so minimal it will probably land both renters in the same DTI numbers (assuming again all other financials are identical.) @Terry #29: I don't understand why people would want to. @Terry #28: Yes, but only if their base rent and income are exactly the same and renter B’s rent is higher because of a built-in “utilities included” rent payment.

Regardless, the difference here is so minimal it will probably land both renters in the same DTI numbers (assuming again all other financials are identical.)

@Terry #29: I don’t understand why people would want to.

]]> By: Terry http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138778 Terry Mon, 18 Jan 2010 18:35:34 +0000 http://www.fivecentnickel.com/?p=3784#comment-138778 I don't understand how people "can't afford" 40% or even 30% of their income for mortgage payments. My DTI ratio (rent (not including utilies) 50% plus 7% debt) is 57 percent. I don’t understand how people “can’t afford” 40% or even 30% of their income for mortgage payments.

My DTI ratio (rent (not including utilies) 50% plus 7% debt) is 57 percent.

]]> By: Terry http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138774 Terry Mon, 18 Jan 2010 18:25:28 +0000 http://www.fivecentnickel.com/?p=3784#comment-138774 So if renter A has a utilities-included rent payment of Z = X rent plus Y utilities and renter B pays separately X rent and Y utilities totalling Z, renter A has a higher DTI than B? Who comes up with this stuff? So if renter A has a utilities-included rent payment of Z = X rent plus Y utilities and renter B pays separately X rent and Y utilities totalling Z, renter A has a higher DTI than B?

Who comes up with this stuff?

]]> By: CharlieBoy http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138738 CharlieBoy Mon, 18 Jan 2010 12:03:50 +0000 http://www.fivecentnickel.com/?p=3784#comment-138738 Well, first off, I have finally learned NOT to care about what mortgage lenders tell you regarding what YOU can afford because their formulas are not taking the need for emergency money into consideration. They don't care if you might struggle to make those mortgage payments every month. They tried to tell me I could afford much more house then I could ever need with a huge mortgage payment each month. So I decided what I could afford in order to be able to sleep well at night. I bought much less house, and the result has been a 15-year mortgage payment that I am actually able to double each month. If I had bought a more expensive house like I was told I could afford, I would be paying my house through what what feel like eternity. And don't even get me started with car payments because I am convinced that Americans have the wrong idea that having car payments throughout their working lives is normal. I disagree. I think having car payments for years and years is a huge financial mistake because we are pouring money into something that will rust and never produce one cent in income. Well, first off, I have finally learned NOT to care about what mortgage lenders tell you regarding what YOU can afford because their formulas are not taking the need for emergency money into consideration. They don’t care if you might struggle to make those mortgage payments every month. They tried to tell me I could afford much more house then I could ever need with a huge mortgage payment each month. So I decided what I could afford in order to be able to sleep well at night. I bought much less house, and the result has been a 15-year mortgage payment that I am actually able to double each month. If I had bought a more expensive house like I was told I could afford, I would be paying my house through what what feel like eternity. And don’t even get me started with car payments because I am convinced that Americans have the wrong idea that having car payments throughout their working lives is normal. I disagree. I think having car payments for years and years is a huge financial mistake because we are pouring money into something that will rust and never produce one cent in income.

]]> By: Matt Jabs http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138722 Matt Jabs Sun, 17 Jan 2010 21:27:52 +0000 http://www.fivecentnickel.com/?p=3784#comment-138722 @Ronnie: Yeah, lenders definitely think we can borrow more than we probably should! :-) @Ronnie: Yeah, lenders definitely think we can borrow more than we probably should! :-)

]]> By: Ronnie http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138718 Ronnie Sun, 17 Jan 2010 19:20:22 +0000 http://www.fivecentnickel.com/?p=3784#comment-138718 Me and hubby are 14/29, which actually amazes us. That's based on minimum expenses. Based on what we actually pay, our back-end DTI goes up to 37. Hopefully by next year we can get it down to 26, where it'll stay for a while (student loans). Good article. It's nice to see exactly how lenders might view our numbers, which I must say is much more favorably than we do! No way we're trying to buy a home with the back-end number as it now stands. Me and hubby are 14/29, which actually amazes us. That’s based on minimum expenses. Based on what we actually pay, our back-end DTI goes up to 37. Hopefully by next year we can get it down to 26, where it’ll stay for a while (student loans). Good article. It’s nice to see exactly how lenders might view our numbers, which I must say is much more favorably than we do! No way we’re trying to buy a home with the back-end number as it now stands.

]]> By: BG http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138662 BG Fri, 15 Jan 2010 21:47:11 +0000 http://www.fivecentnickel.com/?p=3784#comment-138662 #23 said: "...With compensating factors they can still actually go to 50%. I do them EVERY DAY...." Great, so we are no where near the end of this crisis -- sounds like we are still making the problem worse. I don't blame you, Troy, but I blame Fannie/Freddie for still subsidizing these ridiculous mortgages. #23 said: “…With compensating factors they can still actually go to 50%. I do them EVERY DAY….”

Great, so we are no where near the end of this crisis — sounds like we are still making the problem worse. I don’t blame you, Troy, but I blame Fannie/Freddie for still subsidizing these ridiculous mortgages.

]]> By: Troy http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138656 Troy Fri, 15 Jan 2010 21:04:21 +0000 http://www.fivecentnickel.com/?p=3784#comment-138656 Matt: I assure you I am correct. I am not discussing HUD loans. Conforming Fannie/Freddie max ratio's are 45%. With compensating factors they can still actually go to 50%. I do them EVERY DAY. 28%/36% ratio's have not been conforming maximums for 20 years. Until 11/2009 the maximum Fannie/Freddie ratio's were actually 55%. They were recently lowered to 45%. Matt:

I assure you I am correct. I am not discussing HUD loans.

Conforming Fannie/Freddie max ratio’s are 45%. With compensating factors they can still actually go to 50%. I do them EVERY DAY.

28%/36% ratio’s have not been conforming maximums for 20 years. Until 11/2009 the maximum Fannie/Freddie ratio’s were actually 55%. They were recently lowered to 45%.

]]> By: Matt Jabs http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138548 Matt Jabs Fri, 15 Jan 2010 06:21:33 +0000 http://www.fivecentnickel.com/?p=3784#comment-138548 @JoeTaxpayer: Nice Joe, I'll be there ASAP! Definitely glad too... another reason I love doing business with banks who kept historically low interest rates, even through "the bubble building years." Reward the responsible. @JoeTaxpayer: Nice Joe, I’ll be there ASAP! Definitely glad too… another reason I love doing business with banks who kept historically low interest rates, even through “the bubble building years.” Reward the responsible.

]]> By: JoeTaxpayer http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138544 JoeTaxpayer Fri, 15 Jan 2010 06:07:13 +0000 http://www.fivecentnickel.com/?p=3784#comment-138544 Matt, We are just under 15%. Mortgage only, no other debt. Glad to see that 28/36 is still the norm for proper mortgages. Had banks stuck to this, the bubble and crash may never have occurred. Matt,
We are just under 15%. Mortgage only, no other debt.
Glad to see that 28/36 is still the norm for proper mortgages. Had banks stuck to this, the bubble and crash may never have occurred.

]]> By: Matt Jabs http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138528 Matt Jabs Fri, 15 Jan 2010 01:52:28 +0000 http://www.fivecentnickel.com/?p=3784#comment-138528 @Troy #16: FNMA/F<strong>H</strong>LMC limits <strong>are</strong> correctly stated in the article... you are making reference to FHA and VA limits which are 31/43 and 41 respectively. Great point on the taxes & insurance no longer being a factor once the loan is paid off. After all, like you said, they are not debt. @Rosa #17: Yeah, I cannot imagine having the high DTI that some consider acceptable now-a-days... heck, I hate mine being at 15/24! @John #19: Thanks for that John, I love thinking of my debts & expenses literally like that. I'll have to do that. @Troy #16: FNMA/FHLMC limits are correctly stated in the article… you are making reference to FHA and VA limits which are 31/43 and 41 respectively.

Great point on the taxes & insurance no longer being a factor once the loan is paid off. After all, like you said, they are not debt.

@Rosa #17: Yeah, I cannot imagine having the high DTI that some consider acceptable now-a-days… heck, I hate mine being at 15/24!

@John #19: Thanks for that John, I love thinking of my debts & expenses literally like that. I’ll have to do that.

]]> By: John http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138518 John Fri, 15 Jan 2010 00:03:27 +0000 http://www.fivecentnickel.com/?p=3784#comment-138518 Why do you think Mondays are so awful? Everyone spends most of the day paying Uncle Sam. Then most people spend Tuesday and part of Wednesday paying debts. It takes me more than half a week to start making money for myself. The way I am paying debts right now, Monday pays Uncle Sam. Tuesday through noon Thursday are for my debts and Thursday afternoon and Friday covers my living expenses and savings. Maybe I should get a weekend job so I can have enough money for more fun! :/ Why do you think Mondays are so awful? Everyone spends most of the day paying Uncle Sam. Then most people spend Tuesday and part of Wednesday paying debts.

It takes me more than half a week to start making money for myself. The way I am paying debts right now, Monday pays Uncle Sam. Tuesday through noon Thursday are for my debts and Thursday afternoon and Friday covers my living expenses and savings. Maybe I should get a weekend job so I can have enough money for more fun! :/

]]> By: Amy http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138496 Amy Thu, 14 Jan 2010 21:32:49 +0000 http://www.fivecentnickel.com/?p=3784#comment-138496 I have no front end (no mortgage debt, no HELOC or loan), and back end (if I'm doing the math right) is 9% (we have one car payment and one payment to Sears). I am not counting a credit card we pay off monthly (we use it for cell phone bills, medical, groceries, gas, insurance, etc.) I have no front end (no mortgage debt, no HELOC or loan), and back end (if I’m doing the math right) is 9% (we have one car payment and one payment to Sears). I am not counting a credit card we pay off monthly (we use it for cell phone bills, medical, groceries, gas, insurance, etc.)

]]> By: Rosa http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138490 Rosa Thu, 14 Jan 2010 20:54:08 +0000 http://www.fivecentnickel.com/?p=3784#comment-138490 Our DTI is 14%, the extra payments we make put it up to 16%. That's crazy. I never thought to check it against our gross instead of our net before. No wonder people say they "can't afford" to pay for retirement, if they're taking on debt payments at 30% of their gross income. We pay a *lot* for daycare, though - our fixed expenses to gross income is 33%. Our DTI is 14%, the extra payments we make put it up to 16%.

That’s crazy. I never thought to check it against our gross instead of our net before. No wonder people say they “can’t afford” to pay for retirement, if they’re taking on debt payments at 30% of their gross income.

We pay a *lot* for daycare, though – our fixed expenses to gross income is 33%.

]]> By: Troy http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138484 Troy Thu, 14 Jan 2010 20:38:19 +0000 http://www.fivecentnickel.com/?p=3784#comment-138484 Corrections: The maximum FNMA/FLMC ratio's are 45%. 41% with PMI Front and back don't matter tomortgage lenders. I am one. You can have 43/43, or 23/43. Doen't matter on conventional loans. And impounds/escrows for taxes and insurance, while used in calculations in the mortgage industry should not be used once the loan is paid off. Your DTI would be 0/0. It is used because it is a known component of the obligation, not becasue it is a debt. Taxes and insurnce are an expense, not a debt. Like utilities and maintenece are not included. If you are debt free, your DTI is 0 Corrections:

The maximum FNMA/FLMC ratio’s are 45%. 41% with PMI

Front and back don’t matter tomortgage lenders. I am one. You can have 43/43, or 23/43. Doen’t matter on conventional loans.

And impounds/escrows for taxes and insurance, while used in calculations in the mortgage industry should not be used once the loan is paid off. Your DTI would be 0/0. It is used because it is a known component of the obligation, not becasue it is a debt. Taxes and insurnce are an expense, not a debt. Like utilities and maintenece are not included. If you are debt free, your DTI is 0

]]> By: Courtney http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138478 Courtney Thu, 14 Jan 2010 20:30:22 +0000 http://www.fivecentnickel.com/?p=3784#comment-138478 One other thing that isn't mentioned (but I included it in my home ownership costs above) is home owners association dues. One other thing that isn’t mentioned (but I included it in my home ownership costs above) is home owners association dues.

]]> By: Jim http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138464 Jim Thu, 14 Jan 2010 19:08:01 +0000 http://www.fivecentnickel.com/?p=3784#comment-138464 I have rentals with mortgages so I'm not sure how you add those into the mix. Without rental income or rental mortgages our DTI is 12.5%. With rental income & mortgage plus normal income DTI is 26%. I have rentals with mortgages so I’m not sure how you add those into the mix.

Without rental income or rental mortgages our DTI is 12.5%.
With rental income & mortgage plus normal income DTI is 26%.

]]> By: Matt Jabs http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138460 Matt Jabs Thu, 14 Jan 2010 18:40:00 +0000 http://www.fivecentnickel.com/?p=3784#comment-138460 @Bodark: Oversimplification? Probably... but I love the concept. @BG: Excellent point about never being able to get your DTI to 0 for those who own homes, due to property taxes and home insurance... I did not think of that, and I'm sure many others missed it too. @Bodark: Oversimplification? Probably… but I love the concept.

@BG: Excellent point about never being able to get your DTI to 0 for those who own homes, due to property taxes and home insurance… I did not think of that, and I’m sure many others missed it too.

]]> By: Matt Jabs http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138458 Matt Jabs Thu, 14 Jan 2010 18:35:47 +0000 http://www.fivecentnickel.com/?p=3784#comment-138458 Great questions. Lenders calculate your DTI based on your minimum debt obligations, but as most of you have done... it is a VERY healthy exercise to calculate your own DTI based on the accelerated payments you are actually making. @Floridian: the spelling of the word "principle (pal)" is going to be the death of me! ;-) I always confuse those, thanks for reminding me. Great questions.

Lenders calculate your DTI based on your minimum debt obligations, but as most of you have done… it is a VERY healthy exercise to calculate your own DTI based on the accelerated payments you are actually making.

@Floridian: the spelling of the word “principle (pal)” is going to be the death of me! ;-) I always confuse those, thanks for reminding me.

]]> By: BG http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138456 BG Thu, 14 Jan 2010 18:23:41 +0000 http://www.fivecentnickel.com/?p=3784#comment-138456 Oops -- I screwed up my math above. My ratios are actually 14% / 19%. Great article Matt! Oops — I screwed up my math above. My ratios are actually 14% / 19%. Great article Matt!

]]> By: BG http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138450 BG Thu, 14 Jan 2010 18:00:46 +0000 http://www.fivecentnickel.com/?p=3784#comment-138450 5/7 for me (I hate debt). We are making double mortgage payments at this point, working to get to 0/0 like Lee is. Well, technically, I'll never get the front-end ratio to zero since I'll always have property taxes and insurance, so best I can get to right now is: 0/2. 5/7 for me (I hate debt).

We are making double mortgage payments at this point, working to get to 0/0 like Lee is. Well, technically, I’ll never get the front-end ratio to zero since I’ll always have property taxes and insurance, so best I can get to right now is: 0/2.

]]> By: Bodark http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138448 Bodark Thu, 14 Jan 2010 17:48:21 +0000 http://www.fivecentnickel.com/?p=3784#comment-138448 Another way to look at it. The percent of debt you have, can roughly be applied to your day. So if you owe 25% of your income to someone else. Your first two hours of an eight hour day go directly to someone else - your just there for free. I know - it's an oversimplification of sorts. But think if you don't owe anybody (excusing Uncle Sam), then you are just working the amount of hours you want, rather than working the amount of hours you need to cover debt. Just another random way to look at it. Another way to look at it. The percent of debt you have, can roughly be applied to your day. So if you owe 25% of your income to someone else. Your first two hours of an eight hour day go directly to someone else – your just there for free.

I know – it’s an oversimplification of sorts. But think if you don’t owe anybody (excusing Uncle Sam), then you are just working the amount of hours you want, rather than working the amount of hours you need to cover debt.

Just another random way to look at it.

]]> By: Lee http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138444 Lee Thu, 14 Jan 2010 17:31:06 +0000 http://www.fivecentnickel.com/?p=3784#comment-138444 Ours is 14% front, 16% back. Working hard toward 0! Ours is 14% front, 16% back. Working hard toward 0!

]]> By: Courtney http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138440 Courtney Thu, 14 Jan 2010 16:36:44 +0000 http://www.fivecentnickel.com/?p=3784#comment-138440 Housing costs plus a small low-interest student loan currently puts ours at 14/15 (bought in 2005 while I was still in grad school; I've nearly doubled my income since then and hubs has gotten several raises as well). It's about to go down to 12/13 sometime next month, as I'm getting ready to change jobs with another substantial salary increase. Housing costs plus a small low-interest student loan currently puts ours at 14/15 (bought in 2005 while I was still in grad school; I’ve nearly doubled my income since then and hubs has gotten several raises as well). It’s about to go down to 12/13 sometime next month, as I’m getting ready to change jobs with another substantial salary increase.

]]> By: Floridian http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138438 Floridian Thu, 14 Jan 2010 16:16:47 +0000 http://www.fivecentnickel.com/?p=3784#comment-138438 using required payments: 12% (mortgage) using what we actually pay: 19% BTW - it's princiPAL (not princiPLE) when referring to that portion of the debt payment ;) <b>Note from nickel:</b> Spelling fixed, thanks! using required payments: 12% (mortgage)
using what we actually pay: 19%

BTW – it’s princiPAL (not princiPLE) when referring to that portion of the debt payment ;)

Note from nickel: Spelling fixed, thanks!

]]> By: Live for Improvement http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138436 Live for Improvement Thu, 14 Jan 2010 15:57:46 +0000 http://www.fivecentnickel.com/?p=3784#comment-138436 21/41 Only because of a car payment, and credit card payments.I plan to be free of credit card debt in the next 6 months. 21/41 Only because of a car payment, and credit card payments.I plan to be free of credit card debt in the next 6 months.

]]> By: John http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138434 John Thu, 14 Jan 2010 15:42:47 +0000 http://www.fivecentnickel.com/?p=3784#comment-138434 I just bout my house 3 months ago. I am currently at about 21/29. Last month I paid 42/65, which I don't think I can maintain but I had some left over from the previous month. I can probably maintain a 55-60% payment ratio month to month. I just bout my house 3 months ago. I am currently at about 21/29. Last month I paid 42/65, which I don’t think I can maintain but I had some left over from the previous month. I can probably maintain a 55-60% payment ratio month to month.

]]> By: Spoco http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138430 Spoco Thu, 14 Jan 2010 15:22:18 +0000 http://www.fivecentnickel.com/?p=3784#comment-138430 23/43 here. We have got to get out of this debt. We are actually paying 23/62. 23/43 here. We have got to get out of this debt. We are actually paying 23/62.

]]> By: R S http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138428 R S Thu, 14 Jan 2010 14:55:01 +0000 http://www.fivecentnickel.com/?p=3784#comment-138428 Only mortgage debt as well, making my front-end DTI 36% but I make extra payments, bringing it up to 42%. (I qualified for the loan w/ a 49% DTI, and the bank was even willing to give me more in 2008 :-\). Back-end is 59%, which is because I pay for everything on credit and pay it off in full each month. Is the back-end calculated with what you actually pay? Or the minimum payments? When I did a refi a couple months ago, I remember the loan officers summing the minimum payments, not the actual balances.. Only mortgage debt as well, making my front-end DTI 36% but I make extra payments, bringing it up to 42%. (I qualified for the loan w/ a 49% DTI, and the bank was even willing to give me more in 2008 :-\).
Back-end is 59%, which is because I pay for everything on credit and pay it off in full each month.
Is the back-end calculated with what you actually pay? Or the minimum payments? When I did a refi a couple months ago, I remember the loan officers summing the minimum payments, not the actual balances..

]]> By: Chris Thorpe http://www.fivecentnickel.com/2010/01/14/your-debt-to-income-ratio-what-it-is-and-why-you-should-care/comment-page-1/#comment-138426 Chris Thorpe Thu, 14 Jan 2010 14:30:32 +0000 http://www.fivecentnickel.com/?p=3784#comment-138426 Since my only debt is my mortgage, my front end and back end ratios are both 14%. If I count what I pay extra toward my mortgage (just curious to see what this # would be), my back end ratio would be 23%. Since my only debt is my mortgage, my front end and back end ratios are both 14%. If I count what I pay extra toward my mortgage (just curious to see what this # would be), my back end ratio would be 23%.

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