Ratio of Debt to Income

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

How to figure the qualifying ratio

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

The first number in a qualifying ratio is the maximum amount (as a percentage) of gross monthly income that can go to housing (including loan principal and interest, PMI, homeowner's insurance, property taxes, and homeowners' association 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, etcetera.

For example:

With a 28/36 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 run your own numbers, we offer a Loan Pre-Qualifying Calculator.

Just Guidelines

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

Chase Mortgage can walk you through the pitfalls of getting a mortgage. Call us: 435-755-6622.