Debt-to-Income Ratio

Your debt to income ratio is a tool lenders use to determine how much money is available for a monthly home loan payment after you meet your various other monthly debt payments.


How to figure the qualifying ratio

In general, underwriting for conventional mortgages needs 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 percentage of your gross monthly income that can go to housing costs (including mortgage principal and interest, private mortgage insurance, hazard insurance, property taxes, and homeowners' association dues).

The second number is the maximum percentage of your gross monthly income which can be spent on housing costs and recurring debt. For purposes of this ratio, debt includes credit card payments, vehicle payments, child support, et cetera.

For example:

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 want to run your own numbers, please use this Mortgage Loan Qualification Calculator.

Remember these ratios are only guidelines. We will be thrilled to help you pre-qualify to help you determine how large a mortgage loan you can afford. HENRY MUNOZ LOAN OFFICER & SOUTH BAY EQUITY LENDING can answer questions about these ratios and many others. Call us: 3105133942. Want to get started? Apply Online Now.

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