Ratio of Debt to Income

Your debt to income ratio is a formula lenders use to calculate how much money can be used for your monthly mortgage payment after all your other recurring debt obligations have been fulfilled.

About your qualifying ratio

Most conventional loans require a qualifying ratio of 28/36. FHA loans are a little less restrictive, requiring a 29/41 ratio.

For these ratios, the first number is how much (by percent) 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 that makes up the payment.

The second number is what percent of your gross income every month which can be applied to housing expenses and recurring debt together. For purposes of this ratio, debt includes payments on credit cards, auto payments, child support, and the like.

For example:

28/36 (Conventional)

  • 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 on your own income and expenses, please use this Mortgage Loan Pre-Qualification Calculator.

Just Guidelines

Don't forget these are only guidelines. We will be thrilled to go over pre-qualification to help you figure out how much you can afford.

Firelight Mortgage Consultants can walk you through the pitfalls of getting a mortgage. Call us: (303) 228-2254.

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