Question

Kurtis is expecting a promotion which, hopefully, comes with a raise. He would like his raise to help him correct a high debt-to-income (DTI) ratio of 43%. His current annual salary is $53,000. How much of a raise would Kurtis need applied to his annual salary to get his DTI ratio down to a more reasonable 36%?
a.
$4,437
b.
$8,627
c.
$10,305
d.
$63,305

Answer 1

Current debt = 0.43 × $53,000 = $22,790.

Needed salary for 36% DTI = $22,790 ÷ 0.36 = $63,305.56.

Required raise = $63,305.56 − $53,000 ≈ $10,305.56 → about $10,305.

Answer: c. $10,305.