Debt Ratios for Home Financing

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

About your qualifying ratio

For the most part, conventional mortgages require 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 is the percentage of your gross monthly income that can go toward housing. This ratio is figured on your total payment, including homeowners' insurance, HOA dues, PMI - everything.

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

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 Qualification Calculator.

Just Guidelines

Don't forget these are only guidelines. We'd be happy to pre-qualify you to help you figure out how large a mortgage loan you can afford.

At HRN CAPITAL LLC., we answer questions about qualifying all the time. Give us a call at (626)918-4592.

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101 N Citrus Ave Ste 1C
Covina, CA 91724