Ratio of Debt to Income

Your ratio of debt to income is a tool lenders use to calculate how much money can be used for your monthly home loan payment after all your other monthly debts have been fulfilled.

About your qualifying ratio

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

For these ratios, the first number is the percentage of your gross monthly income that can be spent on housing costs. 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 can be applied to housing expenses and recurring debt. Recurring debt includes car loans, child support and credit card payments.

For example:

A 28/36 ratio

  • Gross monthly income of $4,500 x .28 = $1,260 can be applied to housing
  • Gross monthly income of $4,500 x .36 = $1,620 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $4,500 x .29 = $1,305 can be applied to housing
  • Gross monthly income of $4,500 x .41 = $1,845 can be applied to recurring debt plus housing expenses

If you want to calculate pre-qualification numbers with your own financial data, feel free to use our very useful Mortgage Qualification Calculator.

Just Guidelines

Remember these ratios are only guidelines. We'd be happy to help you pre-qualify to help you figure out how large a mortgage loan you can afford.

Nationwide Home Loans can answer questions about these ratios and many others. Give us a call: (562) 693-5048.

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