Lenders use a ratio called "debt to income" to determine your maximum monthly payment after you have paid your other recurring loans.
Usually, conventional mortgage loans require 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 go toward housing costs. This ratio is figured on your total payment, including homeowners' insurance, homeowners' dues, PMI - everything.
The second number is what percent of your gross income every month that should be spent on housing expenses and recurring debt. Recurring debt includes things like car payments, child support and credit card payments.
A 28/36 ratio
With a 29/41 (FHA) qualifying ratio
If you want to calculate pre-qualification numbers on your own income and expenses, use this Mortgage Qualification Calculator.
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