Ratio of Debt to Income

The ratio of debt to income is a formula lenders use to calculate how much money can be used for your monthly home loan payment after you have met your other monthly debt payments.

About your qualifying ratio

Most underwriting for conventional mortgage loans needs 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 go toward housing costs. This ratio is figured on your total payment, including hazard insurance, homeowners' dues, Private Mortgage Insurance - everything.

The second number in the ratio is the maximum percentage of your gross monthly income that should be spent on housing costs and recurring debt together. Recurring debt includes car payments, child support and credit card payments.

Some example data:

A 28/36 qualifying ratio

• Gross monthly income of $2,700 x .28 = $756 can be applied to housing
• Gross monthly income of $2,700 x .36 = $972 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

• Gross monthly income of $2,700 x .29 = $783 can be applied to housing
• Gross monthly income of $2,700 x .41 = $1,107 can be applied to recurring debt plus housing expenses

If you want to calculate pre-qualification numbers on your own income and expenses, feel free to use our Mortgage Pre-Qualification Calculator.

Guidelines Only

Remember these ratios are only guidelines. We'd be happy to pre-qualify you to determine how much you can afford.

At Riviera Funding NMLS#861382 CA DRE Broker #01186669, we answer questions about qualifying all the time. Give us a call at 3103737406.