Debt-to-Income Ratio

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

How to figure the qualifying ratio

Typically, conventional mortgages require a qualifying ratio of 28/36. FHA loans are a little less restrictive, requiring a 29/41 ratio.

The first number is how much (by percent) of your gross monthly income that can go toward housing. This ratio is figured on your total payment, including homeowners' insurance, HOA dues, PMI - everything that constitutes the payment.

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

Examples:

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 on your own income and expenses, please use this Loan Qualification Calculator.

Just Guidelines

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