Ratio of Debt to Income

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Lenders use a ratio called "debt to income" to decide the most you can pay monthly after you've paid your other recurring loans.

About the qualifying ratio

In general, conventional mortgages require a qualifying ratio of 28/36. FHA loans are less strict, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum percentage of your gross monthly income that can go to housing (including mortgage principal and interest, PMI, homeowner's insurance, taxes, and homeowners' association dues).

The second number is the maximum percentage of your gross monthly income which can be spent on housing costs and recurring debt. For purposes of this ratio, debt includes credit card payments, auto payments, child support, et cetera.

For example:

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'd like to calculate pre-qualification numbers on your own income and expenses, feel free to use our Mortgage Loan Pre-Qualifying Calculator. For small business calculators such as a merchant services fee calculator, go to this website.

Don't forget these ratios are only guidelines. We will be thrilled to go over pre-qualification to help you determine how large a mortgage you can afford. At Residential Mortgage Services, we answer questions about qualifying all the time. Give us a call: 702-796-3453 x3055.