Debt to Income Ratio

Lenders use a ratio called "debt to income" to determine the most you can pay monthly after your other recurring debts are paid.


How to figure your qualifying ratio

Usually, underwriting for conventional mortgages requires 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 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 the maximum percentage of your gross monthly income which can be applied to housing costs and recurring debt. Recurring debt includes car loans, child support and monthly credit card payments.

Some example data:

A 28/36 ratio

  • Gross monthly income of $2,700 x .28 = $756 can be applied to housing
  • Gross monthly income of $2,700 x .36 = $972 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $2,700 x .29 = $783 can be applied to housing
  • Gross monthly income of $2,700 x .41 = $1,107 can be applied to recurring debt plus housing expenses


If you want to run your own numbers, feel free to use our Mortgage Qualifying Calculator.

Don't forget these are just guidelines. We'd be happy to pre-qualify you to determine how much you can afford. Cason Home Loans can walk you through the pitfalls of getting a mortgage. Give us a call at 863-286-4824. Ready to begin? Apply Online Now.

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