Debt-to-Income Ratio

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

About the qualifying ratio

For the most part, underwriting for conventional loans needs a debt ratio of 45%. An FHA loan will usually allow for a higher debt load, reflected in a higher 50% ratio.

The debt ratio is what percent of your gross income every month which can be spent on housing expenses and recurring debt together. Recurring debt includes payments on credit cards, vehicle loans, child support, etc.

Examples:

45% (Conventional)

  • Gross monthly income of $2,700 x .45 = $1215 can be applied to recurring debt plus housing expenses

50% (FHA) 

  • Gross monthly income of $2,700 x .41 = $1,350 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 Loan Qualification Calculator.

Guidelines Only

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

At Action Mortgage, we answer questions about qualifying all the time. Call us at (713) 723-7800.

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