Debt-to-Income Ratio

Lenders use a ratio called "debt-to-income" to decide the most you can pay monthly after your other recurring debts have been paid.

About the Qualifying Ratio

Typically, conventional mortgages need a qualifying ratio of 28/36. An FHA mortgage 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 that makes up the payment.

The second number is what percent of your gross income every month which can be applied to housing expenses and recurring debt together. For purposes of this ratio, debt includes payments on credit cards, auto/boat payments, child support, and the like.

Some Example Data:

28/36 (Conventional)

  • 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 run your own numbers, please use this Mortgage Qualification Calculator.

Don't forget these are just guidelines. We will be happy to help you pre-qualify to help you determine how large of a mortgage you can afford. Elmira Savings Bank can answer questions about these ratios and many others. Give us a call at 607-737-8815.

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Elmira Savings Bank is an approved Seller/Servicer of Freddie Mac, FHA/Department of Housing & Urban Development, VA, USDA, and SONYMA (NY Only). Elmira Savings Bank is an Equal Housing Lender committed to ensuring every applicant for credit receive fair and equal treatment throughout the credit application and approval process, as embodied in the Equal Credit Opportunity Act and the Fair Housing Act. All mortgage lending products are subject to credit and property approval. Rates and program terms and conditions are subject to change without notice. Not all products are available in all states or for all amounts. Other restrictions and limitations apply.

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