Debt-to-Income Ratio

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

About the qualifying ratio

Typically, underwriting for conventional loans needs 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.

In these ratios, the first number is how much (by percent) of your gross monthly income that can go toward housing costs. 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 that should be applied to housing costs and recurring debt. Recurring debt includes auto payments, child support and monthly credit card payments.

Some example data:

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 want to run your own numbers, please use this Loan Pre-Qualification Calculator.

Just Guidelines

Don't forget these ratios are only guidelines. We will be thrilled to pre-qualify you to determine how large a mortgage loan you can afford.

At Statewide Funding, we answer questions about qualifying all the time. Call us: (415) 456-7802.

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