Debt/Income Ratio

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

How to figure your qualifying ratio

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

For these ratios, 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, HOA dues, Private Mortgage Insurance - everything that makes up the full payment.

The second number in the ratio is what percent of your gross income every month which can be spent on housing expenses and recurring debt. For purposes of this ratio, debt includes payments on credit cards, car loans, child support, and the like.

Examples:

With a 28/36 qualifying 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 run your own numbers, use this Mortgage Qualification Calculator.

Guidelines Only

Don't forget these are just guidelines. We will be thrilled to pre-qualify you to determine how much you can afford.

At Saab Mortgage, we answer questions about qualifying all the time. Call us at 703-288-0777.

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