Ratio of Debt-to-Income

Your ratio of debt to income is a formula lenders use to calculate how much money is available for your monthly mortgage payment after all your other monthly debt obligations are met.

About the qualifying ratio

For the most part, underwriting for conventional mortgages requires 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 amount (as a percentage) of gross monthly income that can be spent on housing (this includes principal and interest, private mortgage insurance, hazard insurance, property taxes, and homeowners' association dues).

The second number in the ratio is the maximum percentage of your gross monthly income that can be applied to housing expenses and recurring debt together. Recurring debt includes credit card payments, car payments, child support, and the like.

Some example data:

With 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 run your own numbers, feel free to use our superb Mortgage Pre-Qualifying Calculator.

Guidelines Only

Remember these are only guidelines. We'd be happy to help you pre-qualify to help you figure out how large a mortgage loan you can afford.

Carter Financial Solutions can answer questions about these ratios and many others. Call us: 866-840-8745 x2.