Debt Ratios for Home Lending

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

About your qualifying ratio

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

The first number in a qualifying ratio is the maximum amount (as a percentage) of gross monthly income that can be spent on housing costs (including loan principal and interest, private mortgage insurance, hazard insurance, taxes, and HOA dues).

The second number is the maximum percentage of your gross monthly income which can be spent on housing expenses and recurring debt. Recurring debt includes things like auto loans, child support and monthly credit card payments.

Some example data:

28/36 (Conventional)

Gross monthly income of $6,500 x .28 = $1,820 can be applied to housing
Gross monthly income of $6,500 x .36 = $2,340 can be applied to recurring debt plus housing expenses
With a 29/41 (FHA) qualifying ratio

Gross monthly income of $6,500 x .29 = $1,885 can be applied to housing
Gross monthly income of $6,500 x .41 = $2,665 can be applied to recurring debt plus housing expenses
If you’d like to calculate pre-qualification numbers with your own financial data, feel free to use our very useful Mortgage Loan Qualification Calculator.

Don’t forget these ratios are only guidelines. We will be happy to help you pre-qualify to help you figure out how large a mortgage you can afford. At Mortgage Planning Group, we answer questions about qualifying all the time. Give us a call: (412) 241-2001. Ready to begin? Apply Online Now.