Ratio of Debt-to-Income

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

About the qualifying ratio

For the most part, conventional mortgages need a qualifying ratio of 28/36. FHA loans are less strict, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum percentage of gross monthly income that can go to housing (including mortgage principal and interest, PMI, hazard insurance, property tax, and homeowners' association dues).

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

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 want to run your own numbers, we offer a Loan Pre-Qualification Calculator.

Just Guidelines

Don't forget these ratios are just guidelines. We will be thrilled to help you pre-qualify to determine how large a mortgage you can afford.

U.S.A. Lending, Inc. can walk you through the pitfalls of getting a mortgage. Give us a call: 305-967-7200.