Your debt to income ratio means the amount of your monthly payments that goes towards paying off your debts to the lenders and other sources from which you have taken or borrowed the money. Reason could be any, but if the ratio is higher than the limit which has been set for loan modification, then it may become very difficult for you to get a loan modification done.

There is a limit that has been set for all the homeowners, according to which you can use certain amount or percent of your monthly gross earnings to pay off your installments all other debts. If this debt ratio increases the limit, then you may not be able to get a loan modification done for your mortgage, this limit is 38% of your total earnings. This means that you can use 38% of your income for paying your mortgage E's and all other kind of money advances that you might have taken from other financial institutes.

This is how debt to income ratio effects your Loan Modification Application:

* If you have already been paying several installments and have crossed 38% of the limit of your monthly income, you will be denied for loan modification from your lender. The bank will only lend you money after getting satisfied about your financial condition to repay the funds. But if you are already paying more than 38% of your income towards the debts, then how would you take care of all the other expenses if one more credit is added up to your account.

* On the other hand, if the total of your monthly Emi's is say about 20% of your earnings, then you can easily get your loan modification done as 18% is still left with you.

* The amount to be sanctioned for loan modification will also depend on your debt to income ration. For e.g. - If your earnings are $4000 per month then 38% will come out to be $1520. If you are paying $500 or 700 then you have another $800 to pay for the new Emi after loan modification. But, if you are already paying $1100 for the debts, then you are left with only $420 dollars. Now you can really see what amount would be sanctioned to you with this ratio, perhaps it would get rejected. So, this is how the debt to income ratio effects your loan modification application.