Debt-to-Income Ratio

Ratio of Debt-to-Income

The debt-to-income ratio is a formula lenders use to calculate how much money is available for a monthly home loan payment after all your other monthly debt obligations are fulfilled.

About your qualifying ratio

In general, conventional 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 amount (as a percentage) of your gross monthly income that can be spent on housing (including loan principal and interest, PMI, hazard insurance, property tax, and HOA dues).

The second number is what percent of your gross income every month should be spent on housing costs and recurring debt. Recurring debt includes credit card payments, auto/boat loans, child support, et cetera.

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'd like to run your own numbers, feel free to use our Mortgage Qualification Calculator.

Don't forget these ratios are just guidelines. We'd be happy to help you pre-qualify to help you figure out how large a mortgage loan you can afford. Destiny Six Financial can answer questions about these ratios and many others. Call us at (619) 825-9560. Ready to begin? Apply Online Now.