Lenders use a ratio called "debt to income" to determine your maximum monthly payment after your other recurring debts have been paid.
Most conventional mortgage loans need a qualifying ratio of 28/36. An FHA loan will usually allow for a higher debt load, reflected in a higher (29/41) qualifying ratio.
The first number is the percentage of your gross monthly income that can be spent on housing. This ratio is figured on your total payment, including hazard insurance, HOA dues, Private Mortgage Insurance - everything.
The second number in the ratio is the maximum percentage of your gross monthly income that can be applied to housing costs and recurring debt together. Recurring debt includes things like auto/boat loans, child support and monthly credit card payments.
With a 29/41 (FHA) qualifying ratio
If you want to run your own numbers, we offer a Mortgage Qualification Calculator.
Remember these ratios are just guidelines. We will be thrilled to pre-qualify you to determine how large a mortgage loan you can afford.
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