FHA Loan
Debt to Income Ratios
In order to prevent homebuyers from
getting into a home they cannot afford,
FHA guidelines have been set in place
requiring borrowers and/or their spouse to
qualify according to set debt to income
ratios. These ratios are used to calculate
whether or not the potential borrower is
in a financial position that would allow
them to meet the demands that are often
included in owning a home.
The two ratios are as follows:
1.) Mortgage Payment Expense to
Effective Income
Add up the total mortgage payment
(principal and interest, escrow deposits
for taxes, hazard insurance, mortgage
insurance premium, homeowners' dues,
etc.). Then, take that amount and divide
it by the gross monthly income. The
maximum ratio to qualify is 31%.
example:
Total amount of new house payment:
$750.00
Borrower's gross monthly income (including
spouse, if married): $2,850.00
Divide total house payment by gross
monthly income: $750/$2,850
Debt to income ratio: 26.32%
2.) Total Fixed Payment to Effective
Income
Add up the total mortgage payment
(principal and interest, escrow deposits
for taxes, hazard insurance, mortgage
insurance premium, homeowners' dues, etc.)
and all recurring monthly revolving and
installment debt (car loans, personal
loans, student loans, credit cards, etc.).
Then, take that amount and divide it by
the gross monthly income. The maximum
ratio to qualify is 43%.
example:
Total amount of new house payment:
$750.00
Total amount of monthly recurring debt:
$400.00
Total amount of monthly debt: $1,150.00
Borrower's gross monthly income (including
spouse, if married): $2,850.00
Divide total monthly debt by gross monthly
income: $1,150/$2,850
Debt to income ratio: 40.35%
Please note that the above indicators do
not exclusively determine whether or not a
candidate will qualify for an FHA loan.
Other factors will be considered,
including credit history and job
stability.
Would you
like more information about how we can
help you?
Please
Apply Online Now complete our
Request More
Information form or you may also
call and speak directly to a Loan
Specialist, Toll-Free at 1-800-238-9202
Fax or mail to:
Financial
Services Unlimited Inc.
11950 SW 2nd St.
Suite 300
Beaverton, OR 97005
(503) 626-8910 (Fax)
Toll-Free at 1-800-238-9202
