Ratio of Debt-to-Income

The debt to income ratio is a tool lenders use to determine how much of your income can be used for a monthly home loan payment after all your other monthly debts have been met.

How to figure your qualifying ratio

For the most part, conventional loans require a qualifying ratio of 28/36. FHA loans are less restrictive, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum percentage of gross monthly income that can be spent on housing costs (this includes loan principal and interest, PMI, homeowner's insurance, property taxes, and HOA dues).

The second number is what percent of your gross income every month that should be applied to housing expenses and recurring debt. Recurring debt includes auto/boat loans, child support and credit card payments.

For example:

28/36 (Conventional)

  • Gross monthly income of $8,000 x .28 = $2,240 can be applied to housing
  • Gross monthly income of $8,000 x .36 = $2,280 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $8,000 x .29 = $2,320 can be applied to housing
  • Gross monthly income of $8,000 x .41 = $3,280 can be applied to recurring debt plus housing expenses

If you want to calculate pre-qualification numbers on your own income and expenses, use this Mortgage Qualification Calculator.

Just Guidelines

Don't forget these are just guidelines. We'd be happy to pre-qualify you to help you figure out how large a mortgage loan you can afford.

1st Credential Mortgage Inc can answer questions about these ratios and many others. Give us a call: (281) 778-0805.

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