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In order to prevent homebuyers from getting into a home they cannot afford, FHA guidelines have been set in place requiring borrowers to qualify according to set debt to income ratios. Buyers cannot exceed either one. The two ratios are as follows: |
| TOTAL FIXED PAYMENT TO EFFECTIVE INCOME maximum 41% Includes all recurring monthly revolving and installment debt (car loans, personal loans, student loans, credit cards, etc.). See example below Total House Payment $1450 Car loans $400 Student loans $150 Credit Card (minimum) $50 Total $2050 Gross Monthly Income $5000 Divide Total Payments by Income 41% For a household with $5,000 income the highest allowable payment (including total recurring debts) would be $2050 per month. |
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