Debt-to-Income Ratio

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

How to figure the qualifying ratio

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

For these ratios, the first number is how much (by percent) of your gross monthly income that can be spent on housing. This ratio is figured on your total payment, including homeowners' insurance, HOA dues, Private Mortgage Insurance - everything.

The second number is what percent of your gross income every month which can be applied to housing expenses and recurring debt together. Recurring debt includes things like vehicle payments, 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'd like to run your own numbers, feel free to use our Mortgage Loan Pre-Qualifying Calculator.

Guidelines Only

Don't forget these ratios are just guidelines. We will be thrilled to pre-qualify you to determine how much you can afford.

At Primemax Mortgage Group, NMLS#195523, we answer questions about qualifying all the time. Call us at 2565439211.