Debt Ratios for Home Financing

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

How to figure your qualifying ratio

In general, conventional loans need a qualifying ratio of 28/36. FHA loans are a little less restrictive, requiring a 29/41 ratio.

The first number is how much (by percent) of your gross monthly income that can be spent on housing. This ratio is figured on your total payment, including homeowners' insurance, homeowners' dues, PMI - everything that constitutes the payment.

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

For example:

28/36 (Conventional)

  • Gross monthly income of $6,500 x .28 = $1,820 can be applied to housing
  • Gross monthly income of $6,500 x .36 = $2,340 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $6,500 x .29 = $1,885 can be applied to housing
  • Gross monthly income of $6,500 x .41 = $2,665 can be applied to recurring debt plus housing expenses

If you'd like to calculate pre-qualification numbers on your own income and expenses, use this Mortgage Loan Pre-Qualifying Calculator.

Just Guidelines

Remember these are just guidelines. We will be happy to pre-qualify you to help you determine how large a mortgage you can afford.

Southeastern Mortgage Solutions, Inc. NMLS 170525 can answer questions about these ratios and many others. Call us: 770-452-1424.