Debt/Income Ratio

	Shopping for a mortgage? We'd be thrilled to answer your questions about your mortgage needs! Call us at 8082587653. Ready to begin? Apply Online Now.

Lenders use a ratio called "debt to income" to decide the most you can pay monthly after you have paid your other recurring loans.

Understanding your qualifying ratio

Most underwriting for conventional loans requires a qualifying ratio of 28/36. FHA loans are less restrictive, requiring a 29/41 ratio.

For these ratios, the first number is the percentage of your gross monthly income that can be spent on housing costs. This ratio is figured on your total payment, including homeowners' insurance, HOA dues, Private Mortgage Insurance - everything that constitutes the full payment.

The second number in the ratio is the maximum percentage of your gross monthly income that should be spent on housing expenses and recurring debt. Recurring debt includes auto/boat payments, child support and credit card payments.

Some example data:

With a 28/36 qualifying ratio

• Gross monthly income of $3,500 x .28 = $980 can be applied to housing
• Gross monthly income of $3,500 x .36 = $1,260 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

• Gross monthly income of $3,500 x .29 = $1,015 can be applied to housing
• Gross monthly income of $3,500 x .41 = $1,435 can be applied to recurring debt plus housing expenses

If you want to calculate pre-qualification numbers on your own income and expenses, use this Mortgage Qualifying Calculator.

Guidelines Only

Remember these are only guidelines. We will be happy to pre-qualify you to help you figure out how much you can afford.

At Team Howard Mortgage, we answer questions about qualifying all the time. Give us a call at 8082587653.