What is your DTI ratio?

I can't stand jargon. DTI is a perfect example of banker jargon. What does that even mean? I try very hard not to use any of these terms in my daily work life; so let's simplify things. DTI stands for "Debt to Income."
When you break it down, the purpose is to look at the total amount of debt you have outstanding (monthly obligations and minimum payments) versus the total income you have coming in each month (payroll, SS, etc.). Obviously, you want to have an income that exceeds the total amount of debts you have to pay each month. But why should you know what your DTI is, or why should your bank/creditors be concerned with this number?

Most commonly, your DTI is used to measure your ability to make payments on a requested line of credit or loan (like a mortgage, home equity line or even a credit card). The ratio tells lenders how much more debt you can comfortably take on. Ideally, your DTI should be no more than 36% but there are certain lenders who will accept up to 40%. If your number is on the higher side, you're likely to pay a higher rate, so you should try to keep this number lower if at all possible.

To find out what your DTI is, start by adding your outstanding monthly payments together. You should include things like student loans, tuition payments, car loans, monthly credit card payments etc. You don't have to include variable things like groceries and utilities. Add in your expected housing/mortgage payment. Next, you want to divide that by your monthly gross income (before taxes). If you're looking to purchase a house, you can adjust the mortgage payment up or down to decide for yourself how much of a house you can afford.

There are several tools online that you can use to plug in this information. Here are a few for you:
BankRate.com
LiveSolid.com