Ratios Determine Everything
Knowing Your Ratios
Lenders use various ratios to determine a borrower's qualifications. There are several factors that are used when deriving these numbers. The following are the most commonly used.
Debt To Income
All of your recurring debt payments including housing PITI divided by gross monthly income
Loan To Value
Total loan amount divided by home appraised value.
PITI
This one isn't a ratio, but it will determine the total housing payment.
Housing Ratio
Monthly PITI divided by gross monthly income.
Total Debt Ratio
All monthly credit obligations, plus monthly PITI divided by gross monthly income.