The following is an example of how your debt to income ratio (DTI) will be calculated.

First, your mortgage payment, including taxes and insurance, will be calculated. This is also known as your front end ratio.  For this example, we will say that your mortgage payment is $1,300.00 per month.

In addition to your mortgage payment, you have incurred a car loan payment in the amount of $300.00 per month. Lastly, your minimum monthly credit card payment of $50.00 per month will be used. Therefore, all numbers, $1,300.00, $300.00, and $50.00 will be added to get your monthly debt total of $1,650.00, also know as your back end ratio. The next step in calculating your debt ratio is to divide your gross monthly income by the amount of debt. If your gross monthly income was $4,000.00, your debt to income ratio would be 41%.

Lenders typically look for a back end debt to income ratio of 40% or less.