Debt to Income Ratio

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

How to figure your qualifying ratio

For the most part, underwriting for conventional mortgage loans needs a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) qualifying ratio.

In 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, HOA dues, PMI - everything that makes up the payment.

The second number in the ratio is what percent of your gross income every month that can be applied to housing expenses and recurring debt together. For purposes of this ratio, debt includes credit card payments, car loans, child support, and the like.

For example:

A 28/36 qualifying ratio

  • 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, feel free to use our superb Loan Qualification Calculator.

Guidelines Only

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

Price Mortgage Group LLC can walk you through the pitfalls of getting a mortgage. Give us a call at 405-513-7700.

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