Debt to Income Ratio

Lenders use a ratio called "debt to income" to determine the most you can pay monthly after you have paid your other monthly debts.

How to figure your qualifying ratio

In general, conventional mortgage loans require a qualifying ratio of 28/36. FHA loans are a little less strict, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum amount (as a percentage) of gross monthly income that can go to housing costs (including loan principal and interest, PMI, homeowner's insurance, taxes, and HOA dues).

The second number in the ratio is the maximum percentage of your gross monthly income that can be spent on housing costs and recurring debt together. Recurring debt includes vehicle payments, child support and credit card payments.

Some example data:

With 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 want to run your own numbers, feel free to use our very useful Mortgage Loan Pre-Qualifying Calculator.

Guidelines Only

Don't forget these ratios are only guidelines. We'd be thrilled to go over pre-qualification to determine how large a mortgage you can afford.

At Nationwide Home Loans, we answer questions about qualifying all the time. Give us a call: 5626935048.

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Nationwide Home Loans

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8152 Painter Ave., Ste 200
Whittier, CA 90602-3760