According to FHA guidelines, FHA loan borrowers must qualify according to set debt ratios which are used to determine whether the borrower can reasonable be expected to meet the expenses involved with home ownership.
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FHA Debt to Income Ratios

FHA Guidelines for Borrowers

According to FHA guidelines, borrowers and / or their spouse must qualify according to set debt ratios which are used to determine whether the borrower can reasonable be expected to meet the expenses involved with home ownership. There are two ratios.

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: $650.00  
  Borrower's gross monthly income (including spouse, if married): $2,400.00  
  Divide total house payment by gross monthly income: $650.00/$2,400.00  
  Debt to income ratio: 27.08%  

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: $650.00  
  Total amount of monthly recurring debt: $300.00  
  Total amount of monthly debt: $950.00  
  Borrower's gross monthly income (including spouse, if married): $2,400.00  
  Divide total monthly debt by gross monthly income: $950.00/$2,400.00  
  Debt to income ratio: 39.58%  

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.



What does it take to be eligible to apply for an FHA home loan? FHA requirements include details about income, credit rating and other factors, but before a loan officer looks at any of that information, an applicant has to meet the basics. Home Equity Conversion Mortgages, or HECM for short, are designed to help qualified borrowers take out an FHA guaranteed loan against the equity built up in their property. If you're currently thinking of getting an FHA home loan, now is a very good time to be filling out paperwork if you're hoping to take advantage of current, more lenient FHA policies and perks.



FHALoan is a private corporation, is not a government agency, and does not make loans.