Debt Ratios for Residential Lending

The debt to income ratio is a tool lenders use to calculate how much of your income is available for your monthly mortgage payment after you meet your various other monthly debt payments.

About the qualifying ratio

For the most part, conventional loans need a qualifying ratio of 28/36. FHA loans are a little less restrictive, requiring a 29/41 ratio.

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

The second number is what percent of your gross income every month that can be spent on housing costs and recurring debt. Recurring debt includes things like vehicle payments, child support and credit card payments.

For example:

28/36 (Conventional)

  • 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'd like to calculate pre-qualification numbers with your own financial data, we offer a Mortgage Loan Pre-Qualification Calculator.

Guidelines Only

Don't forget these are just guidelines. We'd be happy to pre-qualify you to help you figure out how large a mortgage loan you can afford.

At First Southeast Mortgage Corporation, we answer questions about qualifying all the time. Call us: 954.920.9799.

Basic Pre-Approval

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