# Debt/Income Ratio

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 your qualifying ratio

Most conventional loans need 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 be spent on housing costs. This ratio is figured on your total payment, including homeowners' insurance, HOA dues, PMI - everything.

The second number is the maximum percentage of your gross monthly income that can be applied to housing expenses and recurring debt together. Recurring debt includes credit card payments, auto loans, child support, and the like.

### For example:

28/36 (Conventional)

• Gross monthly income of \$6,500 x .28 = \$1,820 can be applied to housing
• Gross monthly income of \$6,500 x .36 = \$2,340 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

• Gross monthly income of \$6,500 x .29 = \$1,885 can be applied to housing
• Gross monthly income of \$6,500 x .41 = \$2,665 can be applied to recurring debt plus housing expenses

If you want to calculate pre-qualification numbers with your own financial data, use this Mortgage Qualification Calculator.

### Guidelines Only

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

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