Debt Ratios for Home Financing

The ratio of debt to income is a tool lenders use to determine how much money can be used for your monthly home loan payment after all your other monthly debt obligations are fulfilled.

How to figure your qualifying ratio

For the most part, conventional loans require 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 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 can be applied to housing costs and recurring debt. Recurring debt includes credit card payments, vehicle loans, child support, and the like.

For example:

With a 28/36 qualifying ratio

• Gross monthly income of $6,500 x .28 = $1,820 can be applied to housing
• Gross monthly income of $6,500 x .36 = $2,340 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

• Gross monthly income of $6,500 x .29 = $1,885 can be applied to housing
• Gross monthly income of $6,500 x .41 = $2,665 can be applied to recurring debt plus housing expenses

If you want to run your own numbers, use this Loan Qualification Calculator.

Guidelines Only

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

At ADVISORY MORTGAGE, we answer questions about qualifying all the time. Give us a call at 8102292820.