Ratio of Debt to Income

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

About the qualifying ratio

For the most part, conventional loans need a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) ratio.

The first number is how much (by percent) of your gross monthly income that can go toward housing. This ratio is figured on your total payment, including hazard insurance, homeowners' dues, Private Mortgage Insurance - everything that constitutes the full payment.

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 credit card payments, auto payments, child support, etcetera.

Some example data:

28/36 (Conventional)

  • 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, feel free to use our Mortgage Loan Qualification Calculator.

Guidelines Only

Remember these ratios are just guidelines. We'd be happy to pre-qualify you to help you determine how much you can afford.

At Arizona Wholesale Mortgage LLC, we answer questions about qualifying all the time. Call us at 602-369-8482.

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