Debt to Income Ratio

Your 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 have met your other monthly debt payments.


About the qualifying ratio

In general, conventional loans require a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (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 spent on housing (including principal and interest, private mortgage insurance, homeowner's insurance, taxes, and HOA dues).

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

Examples:

A 28/36 ratio

  • Gross monthly income of $4,500 x .28 = $1,260 can be applied to housing
  • Gross monthly income of $4,500 x .36 = $1,620 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $4,500 x .29 = $1,305 can be applied to housing
  • Gross monthly income of $4,500 x .41 = $1,845 can be applied to recurring debt plus housing expenses


If you'd like to run your own numbers, we offer a Loan Qualification Calculator.

Don't forget these ratios are only guidelines. We'd be happy to help you pre-qualify to help you figure out how large a mortgage loan you can afford. Metro Mortgage can walk you through the pitfalls of getting a mortgage. Call us at 866-300-1550. Ready to get started? Apply Online Now.

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