Hello Anwar. Welcome to the forums.
Debt-to-income (DTI) ratio
is a borrower’s total debt divided by their total income.
DTI ratio is calculated as follows: total debt (including the new loan limit) / total income = DTI ratio
For example, 400,000/ 80,000 = The DTI ratio is 5.
A DTI ratio of six or higher is considered higher risk and your application will be declined or scrutinised closely.
The DTI ratio gives a clear understanding of a borrower’s complete financial picture whereas, a loan-to-income ratio (LTI)
assesses a customer’s ability to manage their home loan only.
LTI is calculated as the total home loan requested in the application divided by their gross (before tax) annual income.
For example, if you were looking for a $200,000 loan with a $50,000 income, the LTI ratio will be 4. Both metrics play a role in a bank’s assessment of your loan application.
Do you have a high DTI ratio?
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We can help if you have a high DTI.
Give us a call on 1300 889 743
or fill in our free assessment form
to find out if you qualify for a home loan with a high DTI ratio.