A debt-to-income (DTI) ratio is a key formula that lenders use to determine how much of your income can be dedicated to your monthly home loan payment after covering all other monthly debts. It helps lenders assess your ability to manage additional debt responsibly.
While the Nurse Next Door Program does not set qualifying ratios, mortgage loans generally follow federal guidelines. Here's a quick breakdown:
The first number in a qualifying ratio represents the maximum percentage of your gross monthly income that can go toward housing costs. These costs include principal, interest, PMI, homeowners insurance, property taxes, and HOA dues.
The second number represents the percentage of your gross monthly income that can go toward total debt, including housing expenses, credit cards, car loans, child support, and other recurring obligations.
Let's break it down with a $3,500 gross monthly income:
Remember, these ratios are simply guidelines. Every situation is unique, and a Nurse Next Door Program Specialist is available to help you pre-qualify. We’ll work with you to determine how much home you can comfortably afford, based on your individual financial picture.