Ratio of Debt-to-Income

The ratio of debt to income is a formula lenders use to determine how much of your income can be used for a monthly home loan payment after all your other recurring debt obligations are met.

How to figure the qualifying ratio

Usually, underwriting for conventional mortgage loans requires a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) qualifying ratio.

In these ratios, 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 homeowners' insurance, homeowners' dues, PMI - everything that makes up the payment.

The second number is the maximum percentage of your gross monthly income that can be applied to housing costs and recurring debt together. Recurring debt includes things like car loans, child support and monthly credit card payments.

For example:

With a 28/36 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'd like to calculate pre-qualification numbers with your own financial data, please use this Loan Qualification Calculator.

Just Guidelines

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

At Harbor View Lending* a DBA of Megastar Financial, we answer questions about qualifying all the time. Call us: (207) 571-8034.