Debt/Income Ratio

Your debt to income ratio is a tool lenders use to determine how much of your income can be used for your monthly mortgage payment after you have met your other monthly debt payments.

How to figure your qualifying ratio

For the most part, 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.

The first number is the percentage of your gross monthly income that can go toward housing costs. This ratio is figured on your total payment, including hazard insurance, homeowners' dues, PMI - everything that constitutes the full payment.

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

For example:

With a 28/36 ratio

  • Gross monthly income of $2,700 x .28 = $756 can be applied to housing
  • Gross monthly income of $2,700 x .36 = $972 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $2,700 x .29 = $783 can be applied to housing
  • Gross monthly income of $2,700 x .41 = $1,107 can be applied to recurring debt plus housing expenses

If you'd like to calculate pre-qualification numbers on your own income and expenses, please use this Mortgage Pre-Qualifying Calculator.

Guidelines Only

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

Trustin Mortgage, LLC can answer questions about these ratios and many others. Give us a call at (302) 765-8089.

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