Debt Ratios for Residential Financing

Your ratio of debt to income is a formula lenders use to calculate how much of your income can be used for your monthly mortgage payment after you meet your other monthly debt payments.


Understanding your qualifying ratio

For the most part, conventional mortgage loans require a qualifying ratio of 28/36. FHA loans are a little less restrictive, requiring a 29/41 ratio.

For these ratios, the first number is the percentage of your gross monthly income that can go toward housing. This ratio is figured on your total payment, including homeowners' insurance, homeowners' dues, Private Mortgage Insurance - everything.

The second number in the ratio is the maximum percentage of your gross monthly income which can be applied to housing expenses and recurring debt. Recurring debt includes things like auto/boat payments, child support and monthly credit card payments.

For example:

28/36 (Conventional)

  • 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 run your own numbers, use this Loan Qualifying Calculator.

Don't forget these are only guidelines. We'd be happy to go over pre-qualification to help you figure out how large a mortgage loan you can afford. Synergistic Wealth Management llc can answer questions about these ratios and many others. Call us at 480-282-3662. Ready to get started? Apply Now.

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