Debt Ratios for Home Lending

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

About the qualifying ratio

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

In these ratios, the first number is how much (by percent) of your gross monthly income that can go toward 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 which can be spent on housing expenses and recurring debt together. Recurring debt includes things like car payments, child support and monthly credit card payments.

Examples:

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'd like to calculate pre-qualification numbers with your own financial data, feel free to use our Mortgage Qualification Calculator.

Don't forget these ratios are only guidelines. We will be thrilled to pre-qualify you to help you figure out how much you can afford. At Aspen Financial Group, Inc., we answer questions about qualifying all the time. Call us: (303) 369-5033.

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