 TITLE: How Much House Can I Afford? CONTENT: Consider Your Income and Debt\n-----------------------------\nWhen you apply for a mortgage loan, one of a lender's chief considerations will be your debt-to-income (DTI) ratio, which is the portion of your monthly income that goes toward debt payments. To calculate your DTI ratio, add up your recurring debt-related expenses (credit card bills, student loans, auto loans, etc.) and divide that sum by your gross monthly income (the amount you earn before expenses, withholding taxes, retirement savings, etc.). If your gross earnings are $6,000 a month and the sum of your total debt-related expenses is $2,700, your DTI ratio is 2,700\/6,000, or 45%. From a lender's point of view, the lower your DTI ratio, the better, because somebody with a high DTI ratio may have difficulty covering the additional debt payments of a mortgage loan.\nThe maximum acceptable DTI ratio varies among lenders, but borrowers who receive qualified mortgages that meet federal home-lending guidelines must have a DTI ratio of 43% or lower, and many lenders look for a DTI no higher than 36%. END