Home loan lenders consider more than just an applicant’s income and credit score to determine how much he or she can borrow. One very important factor that lenders used to measure credit worthiness is called a debt-to-income ratio, or DTI. In lending terms, a DTI is technically a factor used to measure how much of your income goes towards paying off loans. When lenders calculate your DTI, they will come up with two different calculations. The first calculation is your front ratio and the second is your back. Understand the difference between your front and back ratio. Also, understand how to calculate debt to income ratio to find out where you stand before you apply for a loan.
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