Debt to
Income Ratios
The ratio of debt to income is a tool lenders use to calculate how much money is available for a monthly home loan payment after you meet your various other monthly debt payments.
How to figure your qualifying ratio
Usually, conventional mortgage loans need 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 costs. This ratio is figured on your total payment, including homeowners' insurance, homeowners' dues, PMI - everything that makes up the payment.
The second number is what percent of your gross income every month which can be spent on housing costs and recurring debt together. Recurring debt includes things like car loans, child support and credit card payments.
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
Just Guidelines
Remember these are just guidelines. We'd be thrilled to pre-qualify you to determine how large a mortgage you can afford.
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