Debt/Income Ratio

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


How to figure your qualifying ratio

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

For 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 that makes up the full payment.

The second number is the maximum percentage of your gross monthly income that can be applied to housing costs and recurring debt. Recurring debt includes things like vehicle payments, child support and credit card payments.

For example:

With a 28/36 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'd like to run your own numbers, please use this Mortgage Pre-Qualification Calculator.

Remember these are only guidelines. We'd be happy to pre-qualify you to determine how much you can afford. Am1st Financial can walk you through the pitfalls of getting a mortgage. Give us a call at 872-222-6178. Ready to begin? Apply Now.

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