Debt-to-Income Ratio

The ratio of debt to income is a formula lenders use to calculate how much of your income is available for your monthly home loan payment after you meet your various other monthly debt payments.

How to figure the qualifying ratio

Usually, conventional loans require 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 amount (as a percentage) of your gross monthly income that can go to housing costs (including mortgage principal and interest, PMI, homeowner's insurance, property tax, and HOA dues).

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

For example:

A 28/36 ratio

  • 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 want to calculate pre-qualification numbers with your own financial data, feel free to use our very useful Mortgage Pre-Qualifying Calculator.

Just Guidelines

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

Saab Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 703-288-0777.

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