Debt Ratios for Home Financing

The ratio of debt to income is a tool lenders use to determine how much money can be used for your monthly home loan payment after you have met your other monthly debt payments.

About the qualifying ratio

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

For these ratios, the first number is the percentage of your gross monthly income that can be spent on housing. This ratio is figured on your total payment, including hazard insurance, homeowners' dues, PMI - everything that makes up the payment.

The second number is what percent of your gross income every month that can be applied to housing expenses and recurring debt. Recurring debt includes car loans, child support and credit card payments.

Some example data:

28/36 (Conventional)

  • Gross monthly income of $2,700 x .28 = $756 can be applied to housing
  • Gross monthly income of $2,700 x .36 = $972 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $2,700 x .29 = $783 can be applied to housing
  • Gross monthly income of $2,700 x .41 = $1,107 can be applied to recurring debt plus housing expenses

If you'd like to run your own numbers, we offer a Mortgage Loan Qualification Calculator.

Just Guidelines

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

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