# Debt-to-Income Ratio

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

### How to figure your qualifying ratio

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

The first number in a qualifying ratio is the maximum amount (as a percentage) of your gross monthly income that can be applied to housing costs (this includes loan principal and interest, private mortgage insurance, homeowner's insurance, taxes, and HOA dues).

The second number in the ratio is what percent of your gross income every month that can be spent on housing costs and recurring debt together. Recurring debt includes auto/boat payments, child support and credit card payments.

### For example:

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 calculate pre-qualification numbers with your own financial data, please use this Mortgage Loan Pre-Qualification Calculator.

### Just Guidelines

Remember these ratios are only guidelines. We'd be thrilled to go over pre-qualification to help you determine how large a mortgage you can afford.

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