Lenders use a ratio called "debt to income" to decide the most you can pay monthly after your other monthly debts are paid.
Most conventional mortgages need a qualifying ratio of 28/36. FHA loans are less strict, requiring a 29/41 ratio.
The first number is the percentage of your gross monthly income that can be spent on housing costs. This ratio is figured on your total payment, including hazard insurance, homeowners' dues, PMI - everything.
The second number is what percent of your gross income every month that can be spent on housing expenses and recurring debt. Recurring debt includes credit card payments, auto payments, child support, et cetera.
With a 28/36 ratio
With a 29/41 (FHA) qualifying ratio
If you want to run your own numbers, we offer a Mortgage Qualification Calculator.
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