Ratio of Debt to Income

Lenders use a ratio called "debt to income" to decide your maximum monthly payment after your other recurring debts have been paid.

How to figure the qualifying ratio

Most underwriting for conventional mortgages 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.

The first number is how much (by percent) of your gross monthly income that can go toward housing. This ratio is figured on your total payment, including hazard insurance, HOA dues, PMI - everything.

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

Some example data:

A 28/36 ratio

  • Gross monthly income of $3,500 x .28 = $980 can be applied to housing
  • Gross monthly income of $3,500 x .36 = $1,260 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $3,500 x .29 = $1,015 can be applied to housing
  • Gross monthly income of $3,500 x .41 = $1,435 can be applied to recurring debt plus housing expenses

If you want to calculate pre-qualification numbers on your own income and expenses, we offer a Mortgage Loan Qualification Calculator.

Guidelines Only

Remember these ratios are only guidelines. We'd be happy to pre-qualify you to determine how large a mortgage 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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