Debt/Income Ratio

Your ratio of debt to income is a tool lenders use to determine how much of your income can be used for your monthly home loan payment after all your other monthly debts have been fulfilled.

How to figure your qualifying ratio

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

For these ratios, 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 hazard insurance, HOA dues, PMI - everything.

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

For example:

A 28/36 qualifying ratio

• Gross monthly income of $8,000 x .28 = $2,240 can be applied to housing
• Gross monthly income of $8,000 x .36 = $2,280 can be applied to recurring debt plus housing expenses

With a 29/41 (FHA) qualifying ratio

• Gross monthly income of $8,000 x .29 = $2,320 can be applied to housing
• Gross monthly income of $8,000 x .41 = $3,280 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 Qualifying Calculator.

Guidelines Only

Remember these ratios are only guidelines. We'd be happy to help you pre-qualify to determine how large a mortgage loan you can afford.

At Family Mortgage Company of Hawaii, Inc. NMLS #244497, we answer questions about qualifying all the time. Give us a call: (808) 935-0678.