how to lower a debt to income ratio
you can lower your debt to income ratio by reducing your monthly recurring debt or increasing your monthly gross income using the above example if john has the same recurring monthly debt of 2 000 but his monthly gross income increases to 8 000 then his dti ratio calculation will change to 2 000 8 000 for a debt to income ratio of 0 25 or 25 similarly if john s income stays the same at 6 000 but he is able to pay off his car loan then his monthly recurring debt payments would fall to 1 500 since the car payment was 500 per month john s dti ratio would be calculated as 1 500 6 000 0 25 or 25 if john is able to both reduce his monthly debt payments to 1 500 and increase his monthly gross income to 8 000 his dti ratio would be calculated as 1 500 8 000 which equals 0 1875 or 18 75 the dti ratio can also be used to measure the percentage of income that goes toward housing costs which for renters is the monthly rent amount lenders look to see if a potential borrower can manage their current debt load while paying their rent on time given their gross income real world example of dti ratiowells fargo co wfc is one of the largest lenders in the united states the bank provides banking and lending products that include mortgages and credit cards to consumers below is an outline of their guidelines of the debt to income ratios that they consider creditworthy or need improvement 