# Debt Ratios for Home Financing

Lenders use a ratio called "debt to income" to determine your maximum monthly payment after you've paid your other recurring loans.

### How to figure your qualifying ratio

Usually, conventional mortgages need 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.

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 homeowners' insurance, HOA dues, PMI - everything.

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

### Examples:

28/36 (Conventional)

• Gross monthly income of \$3,500 x .28 = \$980 can be applied to housing
• Gross monthly income of \$3,500 x .36 = \$1,260 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

• Gross monthly income of \$3,500 x .29 = \$1,015 can be applied to housing
• Gross monthly income of \$3,500 x .41 = \$1,435 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.

### Got a Question?

Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.