Ratio of Debt to Income

Lenders use a ratio called "debt to income" to decide the most you can pay monthly after you have paid your other monthly loans.

About your qualifying ratio

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

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, PMI - everything.

The second number is what percent of your gross income every month that should be applied to housing expenses and recurring debt together. Recurring debt includes credit card payments, car loans, child support, etcetera.

For example:

28/36 (Conventional)

• Gross monthly income of $8,000 x .28 = $2,240 can be applied to housing
• Gross monthly income of $8,000 x .36 = $2,280 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

• Gross monthly income of $8,000 x .29 = $2,320 can be applied to housing
• Gross monthly income of $8,000 x .41 = $3,280 can be applied to recurring debt plus housing expenses

If you'd like to run your own numbers, we offer a Loan Pre-Qualifying Calculator.

Just Guidelines

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

Mortgage Headquarters of Missouri, Inc can answer questions about these ratios and many others. Give us a call: 5733029990.