We make it easy, no matter where you are in Texas & Georgia.
We make it easy, no matter where you are in Texas & Georgia.

What is the Debt to Income Ratio

Woman Counting Money | What is the debt-to-income ratio?

Lenders use a ratio called “debt to income” to determine the most you can pay monthly after your other monthly debts are paid.

How to figure your qualifying ratio
Typically, underwriting for conventional mortgage loans requires a qualifying ratio of 31/45, and up to 65% for HARP loans. FHA loans are typically less restrictive, requiring ratios as 38/50 ratio, and higher with a supported exception. VA has a max back end ratio of 48% generally with higher ratios available based on residual income.

The first number in a qualifying ratio is the maximum percentage of gross monthly income that can go to housing costs (including principal and interest, PMI, hazard insurance, property tax, and HOA 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 auto/boat payments, child support and monthly credit card payments.

Some example data:
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 want to run your own numbers, feel free to use our very useful Mortgage Pre-Qualification Calculator.

Just Guidelines
Remember these ratios are just guidelines. We will be happy to pre-qualify you to determine how large a mortgage you can afford. Global Home Finance Inc. can walk you through the pitfalls of getting a mortgage. Give us a call: 972-724-3222.

More from Global Home Finance

Global Home Realty on Agency for Agents
News

Global Home Realty on Agency for Agents

Brad Cahoone was recently interviewed by Aaron Hendon and Christine Andreasen on Agency For Agents. It was a great experience! We talked about Global Home Realty!

Licensed Insurance Sales Agent

We are seeking a Licensed Insurance Agent to join our team! You will be responsible for expanding the company’s book of business by selling various types of insurance policies to new and existing clients.

Labor Day Special from Global Home Finance
Offers

Labor Day Special

Today is a great day to celebrate the hard work and achievements of all workers in the United States.

We're here to help

Let's Get Started

We help you find the custom mortgage solution that fits your needs, whether you are buying your first home or refinancing an existing mortgage. We are here to help you to find the best mortgage available.