Debt-to-Income Ratio

Your ratio of debt to income is a formula lenders use to calculate how much of your income is available for a monthly mortgage payment after all your other recurring debt obligations have been fulfilled.

About your qualifying ratio

Most underwriting for conventional mortgage loans needs a qualifying ratio of 28/36. FHA loans are less strict, requiring a 29/41 ratio.

For these ratios, 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 homeowners' insurance, homeowners' dues, Private Mortgage Insurance - everything.

The second number is what percent of your gross income every month which can be applied to housing costs and recurring debt. For purposes of this ratio, debt includes payments on credit cards, vehicle loans, child support, etcetera.

For example:

With a 28/36 qualifying 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 want to run your own numbers, we offer a Mortgage Loan Pre-Qualifying Calculator.

Just Guidelines

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.

Statewide Funding can walk you through the pitfalls of getting a mortgage. Give us a call: (415) 456-7802.

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