FHA will determine the probability of successful repayment of the loan by looking at your job stability and
payment history on existing credit relationships as an indicator of future payment performance. They will
also take into account any monies that you may have in reserve, your down payment if any and your
income to debt ratios to see if you can afford to make the monthly payments.
1 . The first ratio they take into account is your Housing Ratio
To calculate this you will need to add up the total mortgage payment which includes the principal, interest, taxes,
hazard insurance, mortgage insurance premiums and homeowner association dues. Take that total payment then
divide it by the gross monthly income. Try to keep the front end / housing ratio at or under 29%.
For Example:
Take the total amount for the new house payment: $1,000.00
Calculate your gross monthly income and include any co-borrowers income in any: $3,000.00
Then divide that house payment by your gross monthly income: $1,000/$3,000
Your housing ratio would be: 33.33%
2. The second ratio they take into account is your Income To Debt Ratio
Add up your total mortgage payment and any other monthly obligations that would appear on your credit report such
as a car payment, minimum payments for credit cards (exclude gas, electric, car insurance, etc. These amount don't
show up on your credit report) then add those amounts together and take that total and divide by the gross monthly
income. Try and keep the debt ratio at or under 41%. Exceptions for much higher ratios will be made if there are
compensating factors such as a clean mortgage payment history, high credit score, sufficient equity in the property or
a large amount of assets.
For Example:
Total amount for your house payment: $1000.00
Total amount for your monthly revolving debt: $300.00
Total amount of monthly debt: $1300.00
Total gross monthly income including your co-borrowers income as well: $3,000.00
Then divide your total monthly debt by your gross monthly income: $1,300 / $3,000
Your debt to income ratio would be: 43.33%
payment history on existing credit relationships as an indicator of future payment performance. They will
also take into account any monies that you may have in reserve, your down payment if any and your
income to debt ratios to see if you can afford to make the monthly payments.
1 . The first ratio they take into account is your Housing Ratio
To calculate this you will need to add up the total mortgage payment which includes the principal, interest, taxes,
hazard insurance, mortgage insurance premiums and homeowner association dues. Take that total payment then
divide it by the gross monthly income. Try to keep the front end / housing ratio at or under 29%.
For Example:
Take the total amount for the new house payment: $1,000.00
Calculate your gross monthly income and include any co-borrowers income in any: $3,000.00
Then divide that house payment by your gross monthly income: $1,000/$3,000
Your housing ratio would be: 33.33%
2. The second ratio they take into account is your Income To Debt Ratio
Add up your total mortgage payment and any other monthly obligations that would appear on your credit report such
as a car payment, minimum payments for credit cards (exclude gas, electric, car insurance, etc. These amount don't
show up on your credit report) then add those amounts together and take that total and divide by the gross monthly
income. Try and keep the debt ratio at or under 41%. Exceptions for much higher ratios will be made if there are
compensating factors such as a clean mortgage payment history, high credit score, sufficient equity in the property or
a large amount of assets.
For Example:
Total amount for your house payment: $1000.00
Total amount for your monthly revolving debt: $300.00
Total amount of monthly debt: $1300.00
Total gross monthly income including your co-borrowers income as well: $3,000.00
Then divide your total monthly debt by your gross monthly income: $1,300 / $3,000
Your debt to income ratio would be: 43.33%
Income Requirements For FHA Loans
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