Debt to Income Ratio

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The debt to income ratio is a tool lenders use to calculate how much of your income can be used for your monthly mortgage payment after all your other monthly debt obligations are fulfilled.

About the qualifying ratio

For the most part, conventional mortgage loans need a qualifying ratio of 28/36. FHA loans are a little less strict, requiring a 29/41 ratio.

The first number in a qualifying ratio is the maximum percentage of gross monthly income that can be spent on housing (this includes loan principal and interest, private mortgage insurance, homeowner's insurance, property tax, and HOA dues).

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

Examples:

A 28/36 qualifying ratio

  • Gross monthly income of $8,000 x .28 = $2,240 can be applied to housing
  • Gross monthly income of $8,000 x .36 = $2,280 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $8,000 x .29 = $2,320 can be applied to housing
  • Gross monthly income of $8,000 x .41 = $3,280 can be applied to recurring debt plus housing expenses


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

Remember these are just guidelines. We'd be thrilled to help you pre-qualify to determine how much you can afford. Reliant Mortgage Services can walk you through the pitfalls of getting a mortgage. Call us: (956) 622-4307.


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