Standard Mortgage Ratios/DTI ratios

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Mortgage lenders/companies consider 2 ratios - Housing Ratio and Mortgage Debt Ratio (Mortgage Income to Debt ratio or Mortgage Debt to Income ratio) before they offer you the loan. Often both the Housing Ratio and Mortgage Debt to Income ratio are collectively known as the DTI Ratios or Mortgage Ratios.

The standard DTI Ratios for conventional loans are 36% (Mortgage Debt Ratio) and 28% (Housing Ratio). However, for FHA loans, the Mortgage Debt to Income Ratio is 41% and Housing ratio is 29%. It's important that your Mortgage Income to debt Ratio and Housing Ratio are well within the standard values. Otherwise, chances are that you may not qualify for the loan.

How do you calculate your debt to income ratio?

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Let's take an example;
Your Monthly payment on mortgage/rent = 4000
Minimum Monthly Credit Card Payments = 2000
Monthly Car Loan Payments = 800
Other Loan payment = 700

Thus, your total monthly debt payment = $7500

Now, let's consider your Gross Annual Salary = $300,000
So, gross monthly salary = $25000
Other monthly income = $5000
Thus, your gross monthly income = $30000

So, mortgage debt to income ratio = (monthly debt payment)/(gross monthly income payment)
= ($7500/$30000) * 100 = 25% which is well within the standard DTI ratio.