Debt to Income Ratio

The ratio of debt to income is a formula lenders use to determine how much money is available for a monthly mortgage payment after you have met your various other monthly debt payments.

How to figure your qualifying ratio

In general, conventional mortgage loans require a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) qualifying ratio.

The first number in a qualifying ratio is the maximum amount (as a percentage) of gross monthly income that can be applied to housing (this includes mortgage principal and interest, PMI, hazard insurance, property tax, and homeowners' association dues).

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

Some example data:

A 28/36 ratio

  • 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 run your own numbers, feel free to use our superb Loan Qualifying Calculator.

Just Guidelines

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

First Access Mortgage can answer questions about these ratios and many others. Call us: (985) 429-1770.

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