Lenders use a ratio called "debt to income" to determine your maximum monthly payment after your other monthly debts are paid.
Most conventional mortgages need a qualifying ratio of 28/36. FHA loans are less strict, 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 hazard insurance, homeowners' dues, PMI - everything that makes up the payment.
The second number in the ratio is the maximum percentage of your gross monthly income that should be applied to housing expenses and recurring debt. Recurring debt includes things like auto/boat loans, child support and monthly credit card payments.
With a 29/41 (FHA) qualifying ratio
If you want to calculate pre-qualification numbers with your own financial data, use this Mortgage Loan Qualifying Calculator.
Remember these ratios are only guidelines. We will be thrilled to go over pre-qualification to help you determine how much you can afford.
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