Debt-to-Income Ratio

	Looking for mortgage advice? We'd be thrilled to answer your questions about our many mortgage solutions! Call us at 512-326-2186. Ready to get started? Apply Online Now.

Your debt to income ratio is a formula lenders use to determine how much money can be used for a monthly home loan payment after you have met your other monthly debt payments.

How to figure the qualifying ratio

Usually, underwriting for conventional mortgage loans needs a qualifying ratio of 28/41. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) qualifying ratio.

The first number is how much (by percent) of your gross monthly income that can be spent on housing. This ratio is figured on your total payment, including homeowners' insurance, homeowners' dues, PMI - everything that makes up the full payment.

The second number in the ratio is the maximum percentage of your gross monthly income that can be spent on housing costs and recurring debt together. Recurring debt includes things like auto/boat loans, child support and credit card payments.

Some example data:

A 28/41 ratio

• Gross monthly income of $4,500 x .28 = $1,260 can be applied to housing
• Gross monthly income of $4,500 x .36 = $1,845 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 run your own numbers, use this Loan Pre-Qualification Calculator.

Guidelines Only

Don't forget these are just guidelines. We'd be happy to pre-approve you to help you figure out how much you can afford.

At Paul M. Johnson - Mortgage Banker, we answer questions about qualifying all the time. Call us: 512-326-2186.