Debt to Income Ratio
Lenders use a ratio called "debt to income" to determine the most you can pay monthly after you have paid your other monthly loans.
How to figure the qualifying ratio
Typically, underwriting for conventional loans needs a qualifying ratio of 28/36. FHA loans are less strict, requiring a 29/41 ratio.
The first number is the percentage of your gross monthly income that can go toward housing. This ratio is figured on your total payment, including hazard insurance, HOA dues, Private Mortgage Insurance - everything that constitutes the payment.
The second number is what percent of your gross income every month that can be spent on housing expenses and recurring debt together. Recurring debt includes auto payments, child support and monthly credit card payments.
A 28/36 qualifying ratio
- 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 run your own numbers, we offer a Mortgage Loan Qualifying Calculator.
Don't forget these ratios are just guidelines. We will be thrilled to go over pre-qualification to help you figure out how much you can afford.
Sky Apply Mortgage can walk you through the pitfalls of getting a mortgage. Call us: (813) 200-7931.
Got a Question?
Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.