Debt-to-Income Ratio

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The ratio of debt to income is a formula lenders use to determine how much money can be used for your monthly mortgage payment after you meet your various other monthly debt payments.

About your qualifying ratio

Most conventional mortgages require a qualifying ratio of 28/36. FHA loans are a little less restrictive, requiring a 29/41 ratio.

The first number is the percentage of your gross monthly income that can be spent on housing. This ratio is figured on your total payment, including hazard insurance, HOA dues, Private Mortgage Insurance - everything that constitutes the full payment.

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

For example:

A 28/36 ratio

  • Gross monthly income of $3,500 x .28 = $980 can be applied to housing
  • Gross monthly income of $3,500 x .36 = $1,260 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $3,500 x .29 = $1,015 can be applied to housing
  • Gross monthly income of $3,500 x .41 = $1,435 can be applied to recurring debt plus housing expenses

If you'd like to calculate pre-qualification numbers with your own financial data, use this Loan Pre-Qualification Calculator.

Don't forget these ratios are just guidelines. We will be happy to pre-qualify you to help you determine how much you can afford. Joe Bell at Rapid Mortgage Co. can walk you through the pitfalls of getting a mortgage. Call us: (727) 527-1454.

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