Ratio of Debt-to-Income

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

How to figure the qualifying ratio

Most conventional mortgages need a qualifying ratio of 28/36. FHA loans are a little less strict, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum percentage of your gross monthly income that can go to housing (this includes mortgage principal and interest, PMI, homeowner's insurance, property tax, and homeowners' association dues).

The second number is what percent of your gross income every month that can be applied to housing expenses and recurring debt. Recurring debt includes credit card payments, vehicle loans, child support, and the like.

For example:

A 28/36 ratio

  • 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 want to calculate pre-qualification numbers on your own income and expenses, feel free to use our superb Mortgage Qualification Calculator.

Just Guidelines

Don't forget these ratios are only guidelines. We will be happy to help you pre-qualify to help you determine how much you can afford.

Abbey Mortgage can walk you through the pitfalls of getting a mortgage. Give us a call at 3523694200.

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Abbey Mortgage

Company NMLS#: 374095

2107 SE 3rd Ave.
Ocala, FL 34471