Debt to Income Ratio

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

About the qualifying ratio

Typically, underwriting for conventional mortgage loans needs 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 amount (as a percentage) of gross monthly income that can be spent on housing (this includes loan principal and interest, PMI, homeowner's insurance, property tax, and homeowners' association dues).

The second number is what percent of your gross income every month that should be spent on housing costs and recurring debt. Recurring debt includes credit card payments, vehicle loans, child support, etcetera.

For example:

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 calculate pre-qualification numbers on your own income and expenses, we offer a Loan Qualifying Calculator.

Just Guidelines

Don't forget these are just guidelines. We will be thrilled to go over pre-qualification to help you figure out how much you can afford.

Bright Vision Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call: (904) 342-3622.

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