# Debt/Income Ratio

Lenders use a ratio called "debt to income" to determine the most you can pay monthly after you've paid your other recurring loans.

### How to figure your qualifying ratio

For the most part, underwriting for conventional mortgages requires a qualifying ratio of 28/36. FHA loans are a little less strict, requiring a 29/41 ratio.

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

The second number in the ratio is what percent of your gross income every month that can be spent on housing costs and recurring debt together. Recurring debt includes vehicle loans, child support and credit card payments.

### For example:

A 28/36 ratio

• Gross monthly income of \$4,500 x .28 = \$1,260 can be applied to housing
• Gross monthly income of \$4,500 x .36 = \$1,620 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

• Gross monthly income of \$4,500 x .29 = \$1,305 can be applied to housing
• Gross monthly income of \$4,500 x .41 = \$1,845 can be applied to recurring debt plus housing expenses

If you'd like to run your own numbers, we offer a Loan Pre-Qualifying Calculator.

### Just Guidelines

Remember these are only guidelines. We will be thrilled to pre-qualify you to determine how large a mortgage you can afford.

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