Debt/Income Ratio

Your debt to income ratio is a tool lenders use to determine how much money is available for your monthly mortgage payment after all your other monthly debts have been fulfilled.

About your qualifying ratio

Typically, underwriting for conventional loans requires a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) ratio.

The first number is the percentage of your gross monthly income that can go toward housing. This ratio is figured on your total payment, including hazard insurance, HOA dues, Private Mortgage Insurance - everything.

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

Examples:

A 28/36 ratio

  • Gross monthly income of $4,500 x .28 = $1,260 can be applied to housing
  • Gross monthly income of $4,500 x .36 = $1,620 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $4,500 x .29 = $1,305 can be applied to housing
  • Gross monthly income of $4,500 x .41 = $1,845 can be applied to recurring debt plus housing expenses

If you want to calculate pre-qualification numbers with your own financial data, please use this Mortgage Qualification Calculator.

Guidelines Only

Don't forget these are only guidelines. We'd be happy to pre-qualify you to help you determine how much you can afford.

Price Mortgage Group LLC can answer questions about these ratios and many others. Call us: 405-513-7700.

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