Ratio of Debt-to-Income

Your ratio of debt to income is a formula lenders use to calculate how much of your income is available for your monthly mortgage payment after you meet your various other monthly debt payments.

Understanding your qualifying ratio

In general, conventional mortgage loans need 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 hazard insurance, homeowners' dues, PMI - 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 things like vehicle loans, child support and monthly credit card payments.

Examples:

With a 28/36 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, please use this Mortgage Loan Qualification Calculator.

Just Guidelines

Remember these ratios are only guidelines. We'd be happy to pre-qualify you to determine how large a mortgage you can afford.

Reliance Mortgage Service, Inc can answer questions about these ratios and many others. Give us a call: 562 320-0510.

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