Ratio of Debt to Income

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

How to figure your qualifying ratio

Usually, conventional mortgage loans require a qualifying ratio of 28/36. FHA loans are less strict, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum percentage of gross monthly income that can be spent on housing costs (this includes mortgage principal and interest, PMI, homeowner's insurance, taxes, and homeowners' association dues).

The second number is what percent of your gross income every month that can be spent on housing costs and recurring debt together. Recurring debt includes payments on credit cards, auto payments, child support, etcetera.

Some example data:

28/36 (Conventional)

  • 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 Mortgage Loan Qualification Calculator.

Guidelines Only

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

At Abbey Mortgage, we answer questions about qualifying all the time. Give us a call: 352-369-4200.

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