Top Ratio: Housing

• 1). Figure out the total monthly gross income for all borrowers responsible for the loan. This is the income before taxes have been deducted.
  
  
• 2). Estimate the new housing payment which includes the combined principal, interest, taxes and insurance (known as PITI).
  
  
• 3). Ask your bank or representative for their maximum allowed loan ratios. Use 28 percent to calculate an estimate housing ratio until you receive the exact allowed percentage.
  
  
• 4). Calculate the top (housing) ratio by dividing the new housing payment (PITI) and your gross monthly income. This amount should not exceed the actual top ratio allowed by the lender.
  
  $1,975 / $6,850 = 0.28 percent top ratio
  
  

Bottom Ratio: Debt Ratio

• 1). Figure out the total of your other monthly debts. These debts include payments recurring monthly such as utilities, car payments, credit cards or loan payments.
  
  
• 2). Combine the total housing payment (PITI) with your other monthly debts. This amount will be used to determine your bottom or debt ratio.
  
  
• 3). Calculate the bottom (debt) ratio by dividing the total debts and housing payment (PITI) by your gross monthly income. This amount should not exceed the actual bottom ratio allowed by the lender.
  
  $2,335 / $6,850 = 0.34 percent bottom ratio.