Home Loan Application Contact Us Staff Profiles

Debt Ratios for Home Financing

The debt to income ratio is a tool lenders use to calculate how much of your income can be used for your monthly mortgage payment after all your other recurring debts have been met.

Understanding your qualifying ratio

For the most part, underwriting for conventional mortgages requires a qualifying ratio of 28/36. FHA loans are less strict, requiring a 29/41 ratio.

For these ratios, the first number is how much (by percent) 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 makes up the payment.

The second number is what percent of your gross income every month that should be spent on housing expenses and recurring debt. Recurring debt includes auto loans, child support and monthly 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 want to run your own numbers, we offer a Loan Qualification Calculator.

Guidelines Only

Don't forget these are just guidelines. We will be thrilled to pre-qualify you to help you determine how much you can afford.

Town & Country Home Loans, Inc. can answer questions about these ratios and many others. Give us a call at (760)789-9995.

Mortgage Questions?

Do you have a question regarding a mortgage program?

Contact Information
Your Question