FHA Loans – FHA Debt Ratio’s Guidelines

In addition to your income, a lender will look at your minimum monthly debts to caculate your debt ratios. The debt ratios’s is what determine “how much” loan you can afford.

FOLLOWING ARE THE TWO TYPES OF DEBT RATIOS’S THAT LENDERS WILL USE:
~ Front-End-Ratio – this is your gross income divided by the new PITI mortgage payment. This standard guidline is 29%
~ Back-End-Ratio – this is your gross income divided by the new PITI mortgage payment and also your minimum monthly payments from your liabilities. The standard guideline is 41%.

FOLLOWING IS THE TYPICAL DEBTS USED TO DETERMINE YOUR QUALIFYING RATIOS’S:
For Front-End-Ratios’s it would be:
~ your current and or future house payment

Back-End-Ratios – The minimum required monthly payments on all of the following:
~Auto loans – (except if there is less than 9 months left to pay)
~Student loans – (except if there is less than 9 months left to pay)
~Personal loans – (except there is less than 9 months left to pay)
~Charge cards – minimum required payments only.
~Child support – (except if there is less than 9 months left to pay
~Alimony – (except there is less than 9 months left to pay
~Federal Tax Lien Repayment Schedules – (if less than 9 months not caculated)

FOLLOWING ARE MONTHLY LIABILITIES THAT ARE NOT USED TO CACULATE DEBT RATIOS’S:
~Utility Bills
~Car & health insurance
~ Cell phone bills

The percentage of debts to income is called the debt-to-income (a.k.a. : back-end) ratios. A good goal is to spend no more than 38% of your income on all debts, including house payment. However, under FHA home loan guidelines you’re allowed to spend up to 41% of your monthly income on housing and other debts — if the rst of your application shows you can handle it.