 TITLE: How Can You Reduce Your Debt-to-Income Ratio? CONTENT: How Do You Calculate DTI?\n-------------------------\nIf you're about to apply for a new loan, calculating your DTI can help you understand how a lender will view your application. It's not difficult to make this calculation, but you will need to gather some information.\nThere are two types of DTI lenders might consider when you're applying for a loan:\n*   **Front-end DTI** includes your regular monthly housing expenses: mortgage or rent, home or renters insurance, property taxes and homeowners association fees. It does not include utilities, phone bills or similar expenses.\n*   **Back-end DTI** includes all of the monthly housing expenses listed above as well as any additional monthly debt payments: credit card minimum payments, student loans, personal loans and auto loans.\nTo calculate your DTI, first determine what your gross monthly income is. That's what you earn monthly before taxes and other payroll deductions, plus any tips, bonuses, business income, pensions, social security, child support or alimony.\nDivide your total monthly housing expenses by your gross monthly income to get your front-end DTI. Add your monthly housing expenses and your monthly debt payments, then divide this figure by your gross monthly income to get your back-end DTI.\nLet's say your gross monthly income is $7,000 with a monthly housing expense of $2,250 and additional monthly debt of $600.\n**Your front-end DTI**:  \n$2,250 \/ $7,000 = 32%\n**Your back-end DTI**:  \n($2,250 + $600) \/ $7,000 = $2,850  \n$2,850 \/ $7,000 = 41% END