Ratio of Debt to Income

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

How to figure the qualifying ratio

Usually, conventional mortgage loans need a qualifying ratio of 28/36. FHA loans are less strict, requiring a 29/41 ratio.

For these ratios, the first number is how much (by percent) of your gross monthly income that can be spent on housing costs. This ratio is figured on your total payment, including hazard insurance, HOA dues, Private Mortgage Insurance - everything that constitutes the full payment.

The second number in the ratio is what percent of your gross income every month which can be spent on housing expenses and recurring debt together. For purposes of this ratio, debt includes credit card payments, auto/boat loans, child support, etcetera.

For example:

With a 28/36 ratio

  • 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 calculate pre-qualification numbers on your own income and expenses, please use this Mortgage Pre-Qualifying Calculator.

Just Guidelines

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

At Savers Home Loans, we answer questions about qualifying all the time. Give us a call: (800) 974-0509.