Thank you for educating us how DTI is calculated. I have spoken to several Lenders and didn't quite understand how our debts affected the pre-approval amount. Now it's very clear and after watching this, we will hold off our decision to buy.
Why is Nicole so cool and clear and smart? This is the type of stuff High Schools should teach. Not “Texas History”, something no one cares about. I bet not even colleges teach. Nicole is amazing!
Soo good! Thank you! I am starting to think about buying a house/ land. I just found your channel so that is perfect timing :) love how straight forward your videos are!
Thank you so much! I am happy to hear that my videos have been helpful to you! If you have other questions/topics that you want to know more about, please let me know! I'll make some videos for them 😊
The video was very interesting but im just curious, rather than all the dividing to find out the dti to find the 45%. If you know your gross income, why not just find 45% of whatever the gross income is? It seems much simpler. Then figure out your debts and whats left would be what you qualify for with a mortgage payment.
I just found your channel and....I Love It!! Thank you, thank you, thank you for educating inmigrants like me!! Now: what if I have NO Debts AT ALL!! What will my DTI ratio will be???
Oh I suck at math but I have 0 monthly debt payment. I got lucky and went to college free, I took 2 years and bought my car cash, and I don’t owe anything on my credit cards. My monthly debt would just be 0?
Yes 👍 I now get it! Why does my lender want to sell my car in order to qualify for a home loan? My car payment is $442.85 and my bal is $3900. I bought this car in 2016 off the showroom and it only has 3900 miles on it…
So if you don't have to add groceries, gas, investing, utilities, spending money..then your DTI is Zero? Car payment, house payment, CC payment, student loan payment those are the only things you have to take into account?
If my husband was self employed the past twenty years and he has now started a new job within the same field but for a company, how long do we need to wait to apply? Do we wait for a whole year after him starting to file taxes to show his yearly gross? We had trouble in the past getting approved since he was self employed and after deductions his pay didn’t look like a lot. This is all new to us.
I'm trying to calculations but I just don't get it. I can understand yours and how you explain everything is so simple but I just can't figure mines out...
Even if that rent is reported to your credit, lenders will not include your rent when calculating your DTI because you will no longer be paying rent when you buy a house!
Superrr Helpful and easy to understand!!! When applying for a loan as a married couple and making $50K. Can I make my numbers based on a Gross income of $100K so that our DTI is lower and the number we can afford higher to show the bank?
Alright ! i"ve been getting ur approach but , there "re something you missed up while DEBT ratio that's about property tax, utility bills may be those will effect on DEBT RATIO
Wow great video! I typically spend over 50% of income on credit every month...but I pay it in full every month. Can you tell me how this would affect the DTI?
I owe about $50,000 in credit card debt that has my score unacceptable for a home loan right now. Best thing I can do is pay down as much as possible in the next 18 months and then see about where everything looks. There's no way I can get approved at this time, there's too many derogatory marks on the report, now I see how to play the game.
Thank you so much for this video! Quick question. How come we use the gross income and not the net? Isnt the net the actual money you have ( after taxes ) ?
Good question Jorge! It is the job of the lender to sell you a loan. They do not necessarily care how practical your payment is after you close on the loan. So lenders will use your gross income when calculating how much you can afford. It is your job to make sure that you have enough take home pay to feel comfortable with those payments!
What if you’re on an income-based repayment plan for your federal student loans? With the income-based, I owe $0/mo towards my loans because they based it on my 2021 taxes, but I’ve had people say that the loans still count towards this ratio even if I’m not required to make payments…
Question if I have no dept & I’m living in my tractor trailer because I drive over the road coast to coast grinding for a 7-$800,000 dollar home in south Florida how much do I need to make monthly/ yearly & I have no kids & my monthly gross is $28-$36,000 before taxes & expenses fuel/and truck note together like$11,000. So please tell how can I get pre-approved for a home!? & I’m 1099
What’s would be the total amount you think we should have in savings for a house aside from grants and loans? I understand we don’t need to have a big amount of savings because of the programs or loans but what would be a safe zone per say for ourselves to finally say ok we think we’re ready to commit into searching for a home? We’re looking into start with our home process but so far we only have around 5,000 in savings I’m a little worried that it won’t be enough after grants or the loans but we would be a first time home buyers
If you've paid off and carry no balance on the credit card no minimum payment will be due, therefore they will not count against you in calculating your DTI.
Hi Nicole , I do not have any debts , just expenses , monthly around $2,000 can I use this as my debt expenses to calculate my DTIR. Thanks for this great video
I think you are asking it wrong… as you want your DTI to go down from the perspective of the lender. The right question is: will the lender look at my expenses, and add it to my 0 debt?
If you’re paying off IRS or any other payments that are being drafted from your checking acct The mortgage company’s will factor that in I pay 250 a month for IRS payments that aren’t on my credit report And the mortgage company added it to my debt to ratio Child support alimony anything youre paying except utilities phone bill They want to know and the mortgage companies will find out when they pull your bank statements
Any suggestions for retired folks that have a history of frugal income despite net worth in the millions including real estate owned? By being frugal, low income tax bracket, but unacceptable debt/income ratio due to low income history in retirement, therefore difficult to prequalify for a loan.
I submitted a application to USDA in Monticello Arkansas. I’m on SSDI n have a part-time job. I been living here in Dermott at this house I want to buy for 14 years.I also have a child. My credit jacked up. I turned n everything they needed. I told them I working on my credit as of right now. I just don’t want to flat out be denied. With covid I mean it’s hard to get in touch with somebody. They say they are out of resources n they will become available in 10 months n I was like WHAT you’re the federal government . But that gives me time to get my credit straight but I need somebody who wants to get me approved n who is passionate about that
USDA does have to get funding approved. They receive a certain budget each year for loans and sometimes they do run out of funding. It is my suggestion that you continue to work on your credit. If you get up to a 620+, you can likely find a local lender that will have funds and give you the usda loan without having to go through them directly.
Wow truly you are Amazing I finally got it , I watched so many similar videos I was not able to get it , I hope you don’t mind if I send your videos to my friends?
I just discovered your videos and I love the thorough explanations in easy to understand language. If I am self employed, which figure on my 1040 tax returns do I use to calculate gross wages? Thank You!
I am so happy that you find the videos helpful! 😊 As a self employed individual lenders are going to look at your net income after deductions. They will look at your most recent 2 years of tax returns and divide the net income by 24 months to give them a typical monthly income. One of the big obstacles is the fact that it is net income. When I buy homes, I have to go through the same process.
Hey Nicole. On the credit card if you have multiple cards with zero balances, what would be the minimum? For example, before it was paid down to zero, the minimum was $25.00. Do I take this number and multiply by the amount of cards I have?
This is what I want to know as well. I was just told it doesn’t matter if it’s at a zero balance the minimum is still counted. Then I’m told it doesn’t count. I’m getting conflicted info.
Hi Nicole. Would you work the following problem out to make sense to me? Problem: Troy and Curtis earn $54000 per year and have $550 in monthly debts. What is the maximum Mortgage loan payment for which they qualify using 28%? 36% ratios? Thank you in advance. - V.
If you've paid off and carry no balance on the credit card no minimum payment will be due, therefore they will not count against you in calculating your DTI.
Do home lenders factor in Fico scores like car loans do? Also I have about 5 medical items in collections on my credit report but I never pay on them. Do lenders deny ppl loans who have this issue? My income is 4K b4 taxes and I want a mortgage under $1290 a month
Your explanation was paced at a speed I could understand, and your visuals were easily comprehensible. Thank you so much for this useful introduction.
Thank you for educating us how DTI is calculated. I have spoken to several Lenders and didn't quite understand how our debts affected the pre-approval amount. Now it's very clear and after watching this, we will hold off our decision to buy.
You are absolutely my new favorite real estate channel on TH-cam. Thank you!
Thank you Salem!
Why is Nicole so cool and clear and smart? This is the type of stuff High Schools should teach. Not “Texas History”, something no one cares about. I bet not even colleges teach. Nicole is amazing!
More money to be made off of people when they don't know about finances. Keep 'em dumb you know?
Soo good! Thank you! I am starting to think about buying a house/ land. I just found your channel so that is perfect timing :) love how straight forward your videos are!
Thank you so much! I am happy to hear that my videos have been helpful to you! If you have other questions/topics that you want to know more about, please let me know! I'll make some videos for them 😊
Through this video and an online DTI calculator, this has given me a lot of great information. Thank you!
The video was very interesting but im just curious, rather than all the dividing to find out the dti to find the 45%. If you know your gross income, why not just find 45% of whatever the gross income is? It seems much simpler. Then figure out your debts and whats left would be what you qualify for with a mortgage payment.
I have just hit subscribed. Thank you, for explaining simply the rationales behind these numbers
Knowledge weighs nothing, but is invaluable. Thank you
My pleasure!
When calculating monthly debt to income ratio, is rent included in the monthly Dept payment?
Rent is not included in your monthly debts when calculating your DTI.
@@NicoleNark Your new proposed house payment will be.
I just found your channel and....I Love It!!
Thank you, thank you, thank you for educating inmigrants like me!!
Now: what if I have NO Debts AT ALL!! What will my DTI ratio will be???
Oh I suck at math but I have 0 monthly debt payment. I got lucky and went to college free, I took 2 years and bought my car cash, and I don’t owe anything on my credit cards. My monthly debt would just be 0?
Thank you, Thank you. THANK YOU .. That was a great explanation...I was unable to figure it out on the online DTI calculator..lol
your accents are very clear with well explained.
Thank you! 😃
Hi miss Narc how can I aquire a home with bad credit and little down payment
Thank you so much I love the way you explain so clearly! I live in Texas and I hope to find someone like you here!
You are so welcome! Wishing you the very best on your home buying journey! Let me know if I can help in any way. 😊
This breakdown was very easy to understand. Thanks
Does using a credit card for all monthly expenses but paying off that card every month without interest hurt your back end debt to income ratio?
Thank you Nicole for your expertise. I will be reaching out to you to see about the USDA path to home ownership. Blessings to you!
My parents are from Arkansas. I am seriously considering buying my first home but working on credit and paying down debts
Super helpful! I'm def starting to feel more confident about being able to afford and get approved for a home loan. :)
You’ve got this! I was terrified about the process when I bought my first house but the more I learned, the better I felt!
How do you calculate the monthly mortgage when you’re searching? How do you know what you can and can’t afford? Thanks!
From her explanation it looks like 25% of your income for mortgage payment.
There are mortgage calculator online. Hope this helps!
Yes 👍 I now get it! Why does my lender want to sell my car in order to qualify for a home loan? My car payment is $442.85 and my bal is $3900. I bought this car in 2016 off the showroom and it only has 3900 miles on it…
I pulled from my 401k and paid off my car and credit cards and then just saved the rest. looking to buy a house by the end of this year fingers 🤞
Also include alimony and child support obligation in DTI ratio
If I am married will debt to income ratios be combined? Great content. I’ve already watched 3 videos, will subscribe now ☺️
So if you don't have to add groceries, gas, investing, utilities, spending money..then your DTI is Zero? Car payment, house payment, CC payment, student loan payment those are the only things you have to take into account?
If my husband was self employed the past twenty years and he has now started a new job within the same field but for a company, how long do we need to wait to apply? Do we wait for a whole year after him starting to file taxes to show his yearly gross? We had trouble in the past getting approved since he was self employed and after deductions his pay didn’t look like a lot. This is all new to us.
I'm trying to calculations but I just don't get it. I can understand yours and how you explain everything is so simple but I just can't figure mines out...
What if you don't have any debt as far as credit card, school loans, car loans. How can I get a fair mortgage with the income that I have.
Then you will get approved for much more!
This is a very clear explanation. Best video on this topic I’ve seen. Thank you!
Thanks for watching!
I am Pakistan. It is very good lecture DTI and understand easy.
So things like Self lender and Rent accelerator ( *report rent payments to credit* ) Could hurt My D.T.I even though it would help raise my credit?👀
Even if that rent is reported to your credit, lenders will not include your rent when calculating your DTI because you will no longer be paying rent when you buy a house!
@@NicoleNark 😱 Very knowledgeable.. thanks🙏🏾
What is included in the mortgage payment? Just principal & interest? Or other things?
Is that just the mortgage payment or do you have to figure taxes and insurance into it?
Superrr Helpful and easy to understand!!! When applying for a loan as a married couple and making $50K. Can I make my numbers based on a Gross income of $100K so that our DTI is lower and the number we can afford higher to show the bank?
If you will both be on the loan, the incomes and debts of each of you will be added into the DTI calculation
I have a doubt
If the person is in rented home don't we include that rent in monthly debt payments??
Nope! Because if you buy a house, you will likely stop renting and no longer be responsible for those rent payments
Perfect explanation and great job explaining different scenarios!
Alright ! i"ve been getting ur approach but , there "re something you missed up while DEBT ratio that's about property tax, utility bills may be those will effect on DEBT RATIO
So if you minimum payment on a card card is 50 dollars that’s what you calculate for that card when trying to get your debt to income ratio?
I have a specific question Ms. Nicole. Please help. I filled out your form. I look forward to hearing from you.
I just sent you an email! 😊
Wow great video! I typically spend over 50% of income on credit every month...but I pay it in full every month. Can you tell me how this would affect the DTI?
Just as she said - whatever your minimum payment is, balance doesn’t matter
Be sure to pay before CC company reports and it won't even show up.
This is the only video that made me understand! Thank you!
I owe about $50,000 in credit card debt that has my score unacceptable for a home loan right now. Best thing I can do is pay down as much as possible in the next 18 months and then see about where everything looks. There's no way I can get approved at this time, there's too many derogatory marks on the report, now I see how to play the game.
Great information in the video. I learnt. Thank you. But the background music was loud and distracting and made it difficult to hear you sometimes.
Thank you for this! It was very clear and concise.
Awesome extremely informative I now have a better perspective of debt to income for buying my first home 👍
Thank you so much for this video! Quick question. How come we use the gross income and not the net? Isnt the net the actual money you have ( after taxes ) ?
Good question Jorge! It is the job of the lender to sell you a loan. They do not necessarily care how practical your payment is after you close on the loan. So lenders will use your gross income when calculating how much you can afford. It is your job to make sure that you have enough take home pay to feel comfortable with those payments!
What if you’re on an income-based repayment plan for your federal student loans? With the income-based, I owe $0/mo towards my loans because they based it on my 2021 taxes, but I’ve had people say that the loans still count towards this ratio even if I’m not required to make payments…
That trap beat is litty
Question if I have no dept & I’m living in my tractor trailer because I drive over the road coast to coast grinding for a 7-$800,000 dollar home in south Florida how much do I need to make monthly/ yearly & I have no kids & my monthly gross is $28-$36,000 before taxes & expenses fuel/and truck note together like$11,000. So please tell how can I get pre-approved for a home!? & I’m 1099
Excellent explanation, thank you breaking it down clearly.
You're very welcome!
What’s would be the total amount you think we should have in savings for a house aside from grants and loans?
I understand we don’t need to have a big amount of savings because of the programs or loans but what would be a safe zone per say for ourselves to finally say ok we think we’re ready to commit into searching for a home?
We’re looking into start with our home process but so far we only have around 5,000 in savings I’m a little worried that it won’t be enough after grants or the loans but we would be a first time home buyers
Can I include monthly avg rent from other properties?
If your student loans are deferred, would it be $0?
If you have a lot of credit cards with no balance would the monthly payment be 0?
Thank you I really appreciate the time and explanation I feel confident I can afford a house
What happens if pay off a couple credit cards but still have them, do there min payments still count against you?
If you've paid off and carry no balance on the credit card no minimum payment will be due, therefore they will not count against you in calculating your DTI.
Hi Nicole , I do not have any debts , just expenses , monthly around $2,000 can I use this as my debt expenses to calculate my DTIR. Thanks for this great video
I think you are asking it wrong… as you want your DTI to go down from the perspective of the lender.
The right question is: will the lender look at my expenses, and add it to my 0 debt?
Are taxes, ins, & pmi included in the 1250 payment?
What if your student loans are deferred and you aren’t required to pay a monthly payment?
Ditto!
How would this work with married couples? Do we combine income and then add the bills?
Yes the income and debts of both individuals are considered!
Gracias, muy claro como lo explicas. Hablo español , entiendo poquito Inglés, pero lo explicas también que es bien entendible, gracias
Thanks for the video! It was very helpful. Does co-signing for an apartment lease count towards “debt” in the DTI?
Not usually!
Hi, would this be the case with a guarantee usda loan in the sense of gross income because I'm a 1099 and my taxes show an adj of line 50000
If you’re paying off IRS or any other payments that are being drafted from your checking acct
The mortgage company’s will factor that in
I pay 250 a month for IRS payments that aren’t on my credit report
And the mortgage company added it to my debt to ratio
Child support alimony anything youre paying except utilities phone bill
They want to know and the mortgage companies will find out when they pull your bank statements
To find fast 45% debt ratio just multiply your income 5000 by 0.45. In example 5000 × 0.45 = 2250 $
Any suggestions for retired folks that have a history of frugal income despite net worth in the millions including real estate owned? By being frugal, low income tax bracket, but unacceptable debt/income ratio due to low income history in retirement, therefore difficult to prequalify for a loan.
If you have student loans that are in forbearance are they used to calculate your DTI?
Does the property tax and home owner's insurance go in the calculation of the DTI too or is it just principle + interest along with car payments..etc?
Simplicity at its FINEST👌🏾👌🏾
I submitted a application to USDA in Monticello Arkansas. I’m on SSDI n have a part-time job. I been living here in Dermott at this house I want to buy for 14 years.I also have a child. My credit jacked up. I turned n everything they needed. I told them I working on my credit as of right now. I just don’t want to flat out be denied. With covid I mean it’s hard to get in touch with somebody. They say they are out of resources n they will become available in 10 months n I was like WHAT you’re the federal government . But that gives me time to get my credit straight but I need somebody who wants to get me approved n who is passionate about that
USDA does have to get funding approved. They receive a certain budget each year for loans and sometimes they do run out of funding. It is my suggestion that you continue to work on your credit. If you get up to a 620+, you can likely find a local lender that will have funds and give you the usda loan without having to go through them directly.
Great video. Thank you.
Is IRS tax payment plan calculated into debt income ratio? Thank you.
Can IRA/401k be counted as assists in the DTL ratio calculation?
Assets are taken into consideration when applying for a loan but are not considered as part of DTI.
When you calculate mortgage does it include home owners insurance etc or is it just the principal and interest?
Very informative video!
Does monthly apartment rent count if you plan to leave the apartment when you get the house? Like , will it increase my DTI ratio?
Great question! It will not count as part of your DTI
If I'm refinancing my mortgage, combining my 1st and 2nd mortgage, do I use my "Pre" or "Post" refinance mortgage amount for calculating my DTI?
I will be buying a house with my 2 sisters will they have to pull their credit reports if they will be living in the house
Wow truly you are Amazing I finally got it , I watched so many similar videos I was not able to get it , I hope you don’t mind if I send your videos to my friends?
Happy to help! Please share! 😊
I just discovered your videos and I love the thorough explanations in easy to understand language. If I am self employed, which figure on my 1040 tax returns do I use to calculate gross wages? Thank You!
I am so happy that you find the videos helpful! 😊 As a self employed individual lenders are going to look at your net income after deductions. They will look at your most recent 2 years of tax returns and divide the net income by 24 months to give them a typical monthly income. One of the big obstacles is the fact that it is net income. When I buy homes, I have to go through the same process.
Do credit cards count if you pay them off every month?
Awesome video and well explained! I appreciate the much neeeded information 😊
How much income you should make to borrow 200k or 250k house loan from conventional lenders ?
Do they count food and phone bill and internet bill ?
Hey Nicole. On the credit card if you have multiple cards with zero balances, what would be the minimum? For example, before it was paid down to zero, the minimum was $25.00. Do I take this number and multiply by the amount of cards I have?
This is what I want to know as well. I was just told it doesn’t matter if it’s at a zero balance the minimum is still counted. Then I’m told it doesn’t count. I’m getting conflicted info.
Thank you for this video :)
Does child support and alimony count in the DTI calculation?
Yes it does!
@@NicoleNark thank you for your answer… not good news for me but thank you :)
How do you calculate a combined dti?
you are wonderful teacher!!! Thank you for explaining this.
What if you get something in collections?
Perfect explanation! Thank you so much!😊
You're very welcome!
Hi Nicole. Would you work the following problem out to make sense to me?
Problem: Troy and Curtis earn $54000 per year and have $550 in monthly debts. What is the maximum Mortgage loan payment for which they qualify using 28%? 36% ratios? Thank you in advance. - V.
What about if your credit cards are pay off and you don’t have to pay minimum. Is this still calculated it as a minimum payment?
If you've paid off and carry no balance on the credit card no minimum payment will be due, therefore they will not count against you in calculating your DTI.
Thank you so much...I appreciate your time and clear explanations!!
You are so welcome! Glad it was helpful! 😊
This was an awesome breakdown. Thank you so much.
Does cell phone bill factor ?
Oh wow, we may have been ready years ago😮
How do deferred student loans factor with DTI?
Even if you are in deferment they will be added! I just posted an updated DTI video that clarifies this!
Thank you so much for this video. It was very informative.
Do home lenders factor in Fico scores like car loans do? Also I have about 5 medical items in collections on my credit report but I never pay on them. Do lenders deny ppl loans who have this issue? My income is 4K b4 taxes and I want a mortgage under $1290 a month