Ratio of Debt to Income

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

About the qualifying ratio

For the most part, conventional mortgages need a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) ratio.

The first number in a qualifying ratio is the maximum amount (as a percentage) of gross monthly income that can be spent on housing (including loan principal and interest, PMI, homeowner's insurance, property taxes, and homeowners' association dues).

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

Examples:

28/36 (Conventional)

  • Gross monthly income of $2,700 x .28 = $756 can be applied to housing
  • Gross monthly income of $2,700 x .36 = $972 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $2,700 x .29 = $783 can be applied to housing
  • Gross monthly income of $2,700 x .41 = $1,107 can be applied to recurring debt plus housing expenses

If you want to run your own numbers, use this Mortgage Loan Pre-Qualifying Calculator.

Guidelines Only

Don't forget these ratios are only guidelines. We will be thrilled 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. Call us: 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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