Debt to Income Ratio (DTI)

    DTI, debt to income ratio. When you’re buying an apartment in a co-op, you typically have to solve for DTI. So the way it’s worked out is between 28 to 36% of your adjusted gross income.

    So what that means is, you take your adjusted gross income from your most recent tax return, which is Line 7, used to be Line 37, but now it’s Line 7, your adjusted gross income and you divide that from your recurring expenses which show up on your credit report which can be anything from student loans, car payments, any credit card bills, any other mortgage that you have, and you have to add on the maintenance for the co-op, any assessments, if there’s a parking charge, all those expenses get divided by your adjusted gross income and a percentage is spit out.

    When, if the number is less than, if this co-op is 36%, if it’s less than 36% then you qualify. If it’s over you wouldn’t qualify but you can solve for it by maybe paying off some credit card debt or by paying off some student loans or some other items.

    So as you work through your financial status, your DTI, talk to us because we will help guide you through what are the things you can do in order to lower your DTI. Credit scores also important and that takes a lot longer to sort of clean up and manipulate. But in terms of paying off some expenses in order to get under DTI, that you can do in sort of a moment’s notice.

    That’s the explanation of DTI, debt to income ratio, hope that was helpful.

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