Mortgage Qualifying Debt Ratios-front and back ratio guidelines
Mortgage Qualifying Debt-to-Income Ratio

Debt Ratio allowed can vary depending on lending program and compensating factors... like a large down payment, cash reserves, or large disposable income. Click here for Mortgage Qualifier Calculator but bare in mind ratios can be exceeded under some conditions. We can assist you!  Apply Online Now or feel free to speak directly with local Alabama's Mortgage Experts. We know finding out just how much home you can buy is important. It's not always cut and dry with these ratios changing a bit recently. Locations in Gadsden 256-543-0670 and Fort Payne 256-364-8300. Statewide Mortgage Services for zero down VA and USDA plus FHA, Conventional, and Jumbo Home Loans

The debt to income ratio is a tool lenders use to calculate how much money can be used for your monthly home loan payment after you have met your other monthly debt payments. Mortgage Qualifier  and Maximum Mortgage Calculators are good tools to aid you in this particular area but guidelines can be exceeded a bit depending on compensating factors. If you are refinancing use our Bill Consolidation Refinance Calculator to see just how much you might cut your debt ratio with a Refinance Home Loan. 

Understanding the qualifying ratio

Usually, underwriting for conventional loans requires a qualifying ratio of 28/36. FHA loans are less restrictive, requiring a 29/41 ratio. We've seen all home programs exceed these depending on compensations factors...like large down payment or large disposable income.

The first number or Front Ratio in a qualifying ratio is the maximum percentage of your gross monthly income that can be spent on housing costs (this includes mortgage principal and interest, PMI, homeowner's insurance, property tax, and homeowners' association dues).

The second number, commonly called  Back Ratio, in the ratio is the maximum percentage of your gross monthly income which can be applied to housing costs and recurring debt. Recurring debt includes vehicle payments, child support and monthly credit card payments.

Some example data:

With a 28/36 ratio

  • 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, feel free to use our superb Mortgage Qualification Calculator. The Maximum Mortgage Calculator can be very helpful for planning. You can view all our calculators here. .
With First Equity Home Loan, Inc. there's no waiting weeks for an approval. Call us for  Fast friendly answers and closing with Alabama's Mortgage Experts.   Buyers, Sellers, and Refinance Customers...we can help them all with local licensed professionals you can count on.

Remember qualifying ratios are just guidelines. It's common to exceed these numbers with compensating factors. We'd be thrilled to give you a free custom mortgage analysis to help guide you to the lowest cost options for your particular situation. First Equity Home Loan, Inc. can answer questions about these ratios, credit scores, the loan program that is best for you,  and many others. Give us a call: 256-543-0670, or 1-888-288-1119. Fort Payne area customers can call our branch in Dekalb county Alabama at 256-364-8300. 

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