Debt Ratios for Residential Financing

Your ratio of debt to income is a tool lenders use to determine how much money is available for your monthly mortgage payment after all your other monthly debts are fulfilled.

How to figure the qualifying ratio

For the most part, conventional 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 how much (by percent) of your gross monthly income that can be spent on housing costs. This ratio is figured on your total payment, including homeowners' insurance, HOA dues, Private Mortgage Insurance - everything.

The second number in the ratio is the maximum percentage of your gross monthly income that should be applied to housing costs and recurring debt together. Recurring debt includes credit card payments, auto/boat payments, child support, etcetera.

Some example data:

A 28/36 ratio

  • Gross monthly income of $6,500 x .28 = $1,820 can be applied to housing
  • Gross monthly income of $6,500 x .36 = $2,340 can be applied to recurring debt plus housing expenses

With a 29/41 (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 = $2,665 can be applied to recurring debt plus housing expenses

If you want to calculate pre-qualification numbers with your own financial data, we offer a Mortgage Qualifying Calculator.

Just Guidelines

Remember these are just guidelines. We'd be happy to go over pre-qualification to determine how much you can afford.

At Family Mortgage Company of Hawaii, Inc. NMLS #244497, we answer questions about qualifying all the time. Call us at (808) 935-0678.

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