Debt Ratios for Home Lending

Your ratio of debt to income is a tool lenders use to calculate how much of your income can be used for your monthly home loan payment after you have met your various other monthly debt payments.

How to figure your qualifying ratio

Most underwriting for conventional mortgages requires 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 in a qualifying ratio is the maximum amount (as a percentage) of your gross monthly income that can go to housing costs (this includes mortgage principal and interest, PMI, hazard insurance, property tax, and HOA dues).

The second number is the maximum percentage of your gross monthly income that should be spent on housing expenses and recurring debt. For purposes of this ratio, debt includes credit card payments, vehicle payments, child support, etcetera.

Examples:

28/36 (Conventional)

  • 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 run your own numbers, feel free to use our Mortgage Loan Qualifying Calculator.

Just Guidelines

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

At Bright Vision Mortgage, we answer questions about qualifying all the time. Give us a call at (904) 342-3622.

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St. Augustine, FL 32084