April 8th, 2022 5:04 PM by Holly Ecimovic
Lenders use a ratio called "debt to income" to determine the most you can pay monthly after your other recurring debts are paid.
In general, underwriting for conventional loans needs 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 in a qualifying ratio is the maximum amount (as a percentage) of gross monthly income that can be spent on housing costs (this includes mortgage principal and interest, PMI, homeowner's insurance, taxes, and HOA dues).
The second number in the ratio is what percent of your gross income every month which can be spent on housing expenses and recurring debt together. Recurring debt includes car loans, child support, and monthly credit card payments.
With a 29/41 (FHA) qualifying ratio
If you want to run your own numbers, use this Mortgage Pre-Qualification Calculator.
Remember these ratios are just guidelines. We'd be thrilled to pre-qualify you to help you determine how large a mortgage you can afford.