Debt Ratios for Residential Lending

The ratio of debt to income is a tool lenders use to calculate how much money is available for your monthly mortgage payment after you have met your various other monthly debt payments.

About your qualifying ratio

Typically, underwriting for conventional mortgages requires 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 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, homeowners' dues, Private Mortgage Insurance - everything that makes up the full payment.

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. For purposes of this ratio, debt includes payments on credit cards, auto loans, child support, etcetera.

For example:

With a 28/36 qualifying ratio

  • Gross monthly income of $3,500 x .28 = $980 can be applied to housing
  • Gross monthly income of $3,500 x .36 = $1,260 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

  • Gross monthly income of $3,500 x .29 = $1,015 can be applied to housing
  • Gross monthly income of $3,500 x .41 = $1,435 can be applied to recurring debt plus housing expenses

If you want to run your own numbers, we offer a Loan Pre-Qualifying Calculator.

Guidelines Only

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

At Evolution Mortgage Inc., we answer questions about qualifying all the time. Give us a call: 631-273-1188.

Questions about DTI Ratios?

Please complete the short form below and one of our Mortgage Specialists will contact you personally to answer your questions.

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