Debt to Income Ratio

Your debt to income ratio is simply a way of determining how much money is available for your monthly mortgage payment after all your other recurring debt obligations are met.

Debt limit

There is generally a debt limit associated with each type of loan, such as a 36% qualifying ratio for a conventional mortgage loan. These qualifying ratios are guidelines. An excellent credit history can help you qualify for a mortgage loan even if your debt payments exceed the underwriting standards. Call your ADR mortgage professional to select a loan documentation program that is best for you.


Understanding the qualifying ratio

Typically conventional loans have a qualifying ratio that max's out at 38%. Usually an FHA loan will allow for a higher debt ratio (debt to income), reflected in a higher (29/41) qualifying ratio or higher. FHA loans are another type of subprime loan and require a significantly higher mortgage insurance charge (similar to the 3.3% x mortgage balance hit you take on a VA loan). Call your ADR mortgage professional to select the right program for you. 


Simply guidelines

Remember these are just guidelines. We’d be happy to pre-qualify you to determine how large a mortgage loan you can afford.  We look forward to helping you buy your dream home.