Debt to Income Ratio

The debt to income ratio is a tool lenders use to calculate how much money can be used for a monthly home loan payment after all your other monthly debt obligations have been fulfilled.

How to figure the qualifying ratio

Usually, underwriting for conventional mortgages requires a qualifying ratio of 28/36. FHA loans are less restrictive, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum amount (as a percentage) of your gross monthly income that can be spent on housing costs (including mortgage principal and interest, PMI, homeowner's insurance, taxes, and HOA dues).

The second number is what percent of your gross income every month which can be spent on housing expenses and recurring debt together. Recurring debt includes auto payments, child support and credit card payments.

Examples:

A 28/36 qualifying ratio

  • 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'd like to run your own numbers, feel free to use our Mortgage Loan Pre-Qualification Calculator.

Guidelines Only

Remember these ratios are only guidelines. We'd be happy to help you pre-qualify to help you figure out how much you can afford.

Sky Apply Mortgage, Inc can answer questions about these ratios and many others. Give us a call at (813) 200-7931.

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