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:
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 29%. See the following example:
| Total amount of new house payment: | $750 | |
| Borrower's gross monthly income (including spouse, if married): | $2,850 | |
| Divide total house payment by gross monthly income: | $750/$2,850 | |
| Debt to income ratio: | 26.32% | |
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 41%. See the following example:
| Total amount of new house payment: | $750 | |
| Total amount of monthly recurring debt: | $400 | |
| Total amount of monthly debt: | $1,150 | |
| Borrower's gross monthly income (including spouse, if married): | $2,850 | |
| 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.
There are many reasons for homebuyers to investigate an FHA home purchase. Your loan is guaranteed by the government, making your application more attractive to lenders.
When you decide to apply for an FHA refinance loan, your lender may have a look at your credit rating. This is a source of stress for many, especially those who need to refinance because they risk default or foreclosure on ARM loans or non-FHA loans with variable interest rates.

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Remember, the FHA does not make home loans. They insure the FHA loans that we can assist you in getting.
FHA.com is a privately owned website that provides information about FHA guaranteed home loans, and is not associated with the federal government or HUD / FHA.
FHA LOAN TYPES
-- FHA Refinance
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SPECIAL FHA TOPICS
-- HOPE Act
-- FHA Tips
-- FHA Loan Prequalify
-- Other Loan Types
-- FHA Loan Questions
