Ratio of Debt to Income

Lenders use a ratio called "debt to income" to determine your maximum monthly payment after your other monthly debts are paid.

About your qualifying ratio

Typically, underwriting for conventional mortgage loans needs a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) qualifying ratio.

For these ratios, the first number is how much (by percent) of your gross monthly income that can be spent on housing. This ratio is figured on your total payment, including hazard insurance, homeowners' dues, Private Mortgage Insurance - everything that makes up the full payment.

The second number is the maximum percentage of your gross monthly income that can be spent on housing expenses and recurring debt together. For purposes of this ratio, debt includes payments on credit cards, auto payments, 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 calculate pre-qualification numbers with your own financial data, feel free to use our Mortgage Qualification Calculator.

Guidelines Only

Don't forget these are only guidelines. We'd be happy to go over pre-qualification to determine how much you can afford.

Bob Rutledge Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: 3149139678.

Quick and Easy Pre-Qualication

Fill out the form below, it will take you 2 minutes, for a quick and easy mortgage pre-qualification. I will examine your information for qualified mortgage programs, down payment assistance, and more! You will have answers to you questions plus I will email you an individualized assessment based on the information you provided. I will personally work on this assessment for you, please allow me 1 to 2 business days to complete and respond.

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