Debt to Income Ratio

The ratio of debt to income is a formula lenders use to determine how much of your income is available for a monthly mortgage payment after all your other monthly debt obligations have been met.

About your qualifying ratio

Usually, underwriting for conventional mortgage loans requires a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) ratio.

The first number is how much (by percent) of your gross monthly income that can be spent on housing. This ratio is figured on your total payment, including hazard insurance, homeowners' dues, PMI - everything.

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

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 calculate pre-qualification numbers with your own financial data, please use this Mortgage Loan Qualification Calculator.

Just Guidelines

Don't forget these are just guidelines. We'd be happy to help you pre-qualify to help you figure out how large a mortgage loan you can afford.

At My FL Home Loans, Inc., we answer questions about qualifying all the time. Give us a call: (727) 743-1620.

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