Ratio of Debt to Income

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

How to figure the qualifying ratio

Most underwriting for conventional loans requires a qualifying ratio of 28/43. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/45) qualifying ratio.

The first number is how much (by percent) of your gross monthly income that can go toward housing costs. This ratio is figured on your total payment, including hazard insurance, homeowners' dues, Private Mortgage Insurance - everything that constitutes the payment.

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

Some example data:

A 28/43 ratio

  • Gross monthly income of $6,500 x .28 = $1,820 can be applied to housing
  • Gross monthly income of $6,500 x .43 = $2,795 can be applied to recurring debt plus housing expenses

With a 29/45 (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 = $2,925 can be applied to recurring debt plus housing expenses


If you want to calculate pre-qualification numbers on your own income and expenses, we offer a Loan Pre-Qualification Calculator.

Don't forget these ratios are just guidelines. We will be thrilled to complete a pre-qualification to determine how large a mortgage loan you can afford. Oak Mortgage Company, LLC can answer questions about these ratios and many others. Give us a call at (856) 988-8100 x3015.


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