What is a “debt-to-income” ratio?

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A debt-to-income (DTI) ratio is your combined monthly debts divided by your gross (before taxes) monthly income. This ratio is one way lenders determine what they think you can afford and will help them decide if adding an additional monthly payment is possible.

A good rule of thumb is to try to keep your DTI ratio below 43%. You should try to keep this number lower. By doing this you will have more of your income to use on other things besides payments, such as entertainment, food, travel and savings

The Consumer Financial Protection Bureau has more information on this topic. If you are interested in learning more visit: https://bit.ly/3dlaEyo