Ratio of Debt to Income

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

Understanding the qualifying ratio

For the most part, underwriting for conventional loans requires a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) ratio.

The first number is the percentage of your gross monthly income that can go toward housing. This ratio is figured on your total payment, including hazard insurance, HOA dues, Private Mortgage Insurance - everything.

The second number is what percent of your gross income every month that should be applied to housing expenses and recurring debt. For purposes of this ratio, debt includes payments on credit cards, vehicle payments, child support, etcetera.

For example:

28/36 (Conventional)

• Gross monthly income of \$6,500 x .28 = \$1,820 can be applied to housing
• Gross monthly income of \$6,500 x .36 = \$2,340 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

• Gross monthly income of \$6,500 x .29 = \$1,885 can be applied to housing
• Gross monthly income of \$6,500 x .41 = \$2,665 can be applied to recurring debt plus housing expenses

If you'd like to calculate pre-qualification numbers with your own financial data, use this Loan Pre-Qualification Calculator.

Just Guidelines

Remember these ratios are only guidelines. We'd be happy to go over pre-qualification to determine how much you can afford.

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