SAN FRANCISCO (KGO) -- Home buyers, do you know your debt to income ratio? Michael Finney has another 7 On Your Side Quick Tip for you!
Because of the 2008 mortgage crisis, your debt to income ratio is more important than ever before. And that's because there's a rule that says lenders must believe their borrowers can pay the money back. Now that may seem like a no-brainer to you, but before 2008, if your breath could fog a mirror, you could get a loan.
Now, lenders have specific rules. They want to know that no more than 28% of your gross income is going towards your mortgage payment, and no more than 43% of your gross income is going towards all your bills. That includes bills like credit card bills, car loans, and your mortgage payment. So, if you have $10,000 a month coming in, $2,800 can go towards a mortgage, and all your payments all together should be at $4,300 or less.
Take a look at more stories and videos by Michael Finney and 7 On Your Side.
