Your ratio of debt to income is a formula lenders use to determine how much money can be used for a monthly mortgage payment after all your other monthly debt obligations are fulfilled.
Most underwriting for conventional loans requires a qualifying ratio of 28/36. FHA loans are less strict, requiring a 29/41 ratio.
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, homeowners' dues, Private Mortgage Insurance - everything.
The second number in the ratio is the maximum percentage of your gross monthly income that can be spent on housing costs and recurring debt. Recurring debt includes vehicle loans, child support and credit card payments.
A 28/36 ratio
With a 29/41 (FHA) qualifying ratio
If you'd like to calculate pre-qualification numbers on your own income and expenses, use this Loan Qualifying Calculator.
Don't forget these are only guidelines. We will be happy to go over pre-qualification to determine how large a mortgage loan you can afford.
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