Ratio of Debt-to-Income

The debt to income ratio is a formula lenders use to calculate how much of your income can be used for your monthly mortgage payment after all your other monthly debts are fulfilled.

How to figure your qualifying ratio

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

In these ratios, the first number is the percentage 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 constitutes the payment.

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

For example:

With a 28/36 qualifying ratio

  • 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, use this Mortgage Loan Qualification Calculator.

Just Guidelines

Don't forget these are only guidelines. We'd be happy to pre-qualify you to help you figure out how much you can afford.

Utah Funding can walk you through the pitfalls of getting a mortgage. Give us a call: (949) 486-3777.