Ratio of Debt to Income

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Lenders use a ratio called "debt to income" to determine your maximum monthly payment after you have paid your other monthly debts.

How to figure your qualifying ratio

Typically, conventional mortgage loans require a qualifying ratio of 28/36. FHA loans are less strict, 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 hazard insurance, HOA dues, PMI - everything.

The second number is what percent of your gross income every month that should 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 calculate pre-qualification numbers with your own financial data, use this Loan Pre-Qualification Calculator.

Don't forget these ratios are just guidelines. We will be happy to go over pre-qualification to determine how large a mortgage loan you can afford. At First Residential Mortgage, we answer questions about qualifying all the time. Call us at 276-782-1677.