Finance
An Alabama homebuyer's debt-to-income ratio is calculated by dividing:
AMonthly income by total debt
BTotal monthly debt payments by gross monthly income✓ Correct
CAnnual income by total loan amount
DNet income by monthly mortgage payment
Explanation
Debt-to-income (DTI) ratio = Total monthly debt payments ÷ Gross monthly income. Lenders use this to assess the borrower's ability to repay. Most conventional loans require a DTI of 43% or less.
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