Ratio of Debt-to-Income

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

About the qualifying ratio

For the most part, conventional loans require a qualifying ratio of 28/36. FHA loans are a little less restrictive, 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 applied to housing (this includes mortgage principal and interest, private mortgage insurance, hazard insurance, taxes, and homeowners' association dues).

The second number is the maximum percentage of your gross monthly income that should be applied to housing expenses and recurring debt. Recurring debt includes credit card payments, car loans, child support, and the like.

For example:

28/36 (Conventional)

  • Gross monthly income of $2,700 x .28 = $756 can be applied to housing
  • Gross monthly income of $2,700 x .36 = $972 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $2,700 x .29 = $783 can be applied to housing
  • Gross monthly income of $2,700 x .41 = $1,107 can be applied to recurring debt plus housing expenses

If you want to run your own numbers, feel free to use our very useful Loan Qualifying Calculator.

Guidelines Only

Remember these are just guidelines. We'd be happy to pre-qualify you to help you determine how much you can afford.

Goodrich Mortgage Group can answer questions about these ratios and many others. Give us a call at 208-941-3337.


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