Debt to Income Ratio

Your ratio of debt to income is a formula lenders use to determine how much money can be used for a monthly home loan payment after you have met your other monthly debt payments.

How to figure the qualifying ratio

Typically, underwriting for conventional loans requires 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 amount (as a percentage) of gross monthly income that can go to housing (this includes mortgage principal and interest, PMI, hazard insurance, property taxes, and homeowners' association dues).

The second number in the ratio is what percent of your gross income every month that should be spent on housing expenses and recurring debt. Recurring debt includes credit card payments, car loans, child support, etcetera.

Some example data:

28/36 (Conventional)

  • Gross monthly income of $3,500 x .28 = $980 can be applied to housing
  • Gross monthly income of $3,500 x .36 = $1,260 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $3,500 x .29 = $1,015 can be applied to housing
  • Gross monthly income of $3,500 x .41 = $1,435 can be applied to recurring debt plus housing expenses

If you'd like to calculate pre-qualification numbers on your own income and expenses, please use this Mortgage Pre-Qualification Calculator.

Guidelines Only

Don't forget these ratios are only guidelines. We'd be thrilled to help you pre-qualify to determine how large a mortgage loan you can afford.

First Access Mortgage can walk you through the pitfalls of getting a mortgage. Call us at (985) 429-1770.

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