Watching Your Debt-to-Income Ratio

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Lenders are paying close attention to the debt-to-income ratio of consumers of today's housing crisis.

In today's economy, getting credit is harder for many Americans.
It all boils down to a math game - and something lenders are looking at very closely nowadays.
Consumers have bought homes based on what someone told them they qualified for, not what they could actually afford every month.  
In order to get a better understanding of how to determine your debt-to-income ratio, first add up your monthly debt load.

Then divide that by your total monthly net income, the money you actually bring home.  

Lenders will use that figure to determine if you are too far in debt. 

If the ratio is 40 percent or more, your credit situation is out of control.

Thirty-six to 40 percent is borderline, but 30 to 36 percent is better. 

You may get a loan at a decent rate, but you are still not in a great position. Your goal should be under 30 percent, so watch your other expenses to keep this debt low.

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