Ratio of Debt to Income

Searching for a loan? We'd be thrilled to talk about our mortgage offerings! Call us at (949) 494-4701. Ready to begin? Apply Now.

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

About your 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) ratio.

The first number in a qualifying ratio is the maximum amount (as a percentage) of gross monthly income that can be applied to housing costs (including mortgage principal and interest, PMI, homeowner's insurance, property tax, and homeowners' association dues).

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

For example:

28/36 (Conventional)

  • 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'd like to calculate pre-qualification numbers on your own income and expenses, we offer a Loan Pre-Qualification Calculator.

Don't forget these are only guidelines. We'd be thrilled to help you pre-qualify to help you determine how much you can afford. RTC Mortgage Corporation can answer questions about these ratios and many others. Give us a call at (949) 494-4701.

Got a Question?

Do you have a question? We can help. Simply fill out the form below and we'll contact you with the answer, with no obligation to you. We guarantee your privacy.

Your Information
Your Question