Ratio of Debt-to-Income

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

About your qualifying ratio

Typically, conventional mortgages need a qualifying ratio of 28/36. FHA loans are a little less strict, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum percentage of gross monthly income that can be spent on housing (including mortgage principal and interest, PMI, hazard insurance, taxes, and homeowners' association dues).

The second number is the maximum percentage of your gross monthly income that should be spent on housing costs and recurring debt. Recurring debt includes payments on credit cards, auto/boat loans, child support, etcetera.

Some example data:

With a 28/36 ratio

  • Gross monthly income of $4,500 x .28 = $1,260 can be applied to housing
  • Gross monthly income of $4,500 x .36 = $1,620 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $4,500 x .29 = $1,305 can be applied to housing
  • Gross monthly income of $4,500 x .41 = $1,845 can be applied to recurring debt plus housing expenses

If you'd like to run your own numbers, use this Mortgage Pre-Qualifying Calculator.

Guidelines Only

Don't forget these are just guidelines. We will be thrilled to pre-qualify you to determine how much you can afford.

At Pacific Loan Brokers, we answer questions about qualifying all the time. Give us a call: 877-310-6200.

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