FHA Ratio Guidelines

FHA Ratio Guidelines

The Federal Housing Administration (FHA) uses ratio guidelines to determine whether potential borrowers can qualify for FHA insurance on their mortgage loans. The FHA program is less concerned with your credit history than it is with your ability to generate enough income to cover all your debt payments, including your new FHA loan.

Total Debt

One of the key numbers in the FHA ratio guidelines is the calculation of your total monthly debt. For purposes of this calculation, the FHA is concerned only with debt that will take you more than 10 months to pay off. Types of debt that fall under the total long-term debt category include car loans, student loans, large credit card balances and your new mortgage payment.

Monthly Income

Another key number related to FHA ratio guidelines is your total monthly income. For FHA purposes, you should always use your pretax, or gross, income. This is the total amount the employer pays you before deducting any taxes or other withholding, not the net amount that you deposit in your checking account.

Mortgage to Income

The first FHA ratio guideline that you must satisfy is to show that your new mortgage payment will not exceed 31 percent of your monthly income. This means that for each $1,000 of monthly income you earn, the FHA will allow you a mortgage payment of $310. Keep in mind that the mortgage payment includes property taxes, dues if you are in a homeowners association, and mortgage and homeowner's insurance premium payments.

Total Debt to Income

The FHA also compares your total monthly payments on all your long-term debt to your gross monthly income. Absent extraordinary circumstances, this ratio should not exceed 43 percent. Again, this means that for each $1,000 of monthly income the FHA will allow you $430 in total long-term debt payments.


According to the FHA Handbook, the FHA will allow some variance from the standard 31 and 43 percent ratio guidelines. There are no hard and fast rules for these variances. Some lenders will allow higher debt-to-income ratios if the borrower has an excellent credit score, a higher than required down payment, or a significant amount of cash reserves or other assets.

About the Author

The Constitution Guru has worked as a writer and editor for "BYU Law Review" and "BYU Journal of Public Law." He is an experienced attorney with a law degree and a B.A. degree in history with an emphasis on U.S. Constitutional history, both earned at Brigham Young University.

Photo Credits

Disclaimer: No statement on this site is a commitment to make a loan. Loans are subject to borrower qualifications, including income, property evaluation, sufficient equity in the home to meet Loan-to-Value requirements, and final credit approval. Approvals are subject to underwriting guidelines, interest rates, and program guidelines and are subject to change without notice based on applicant's eligibility and market conditions. Refinancing an existing loan may result in total finance charges being higher over the life of a loan. Reduction in payments may reflect a longer loan term. Terms of any loan may be subject to payment of points and fees by the applicant  Equal Opportunity Lender. NMLS#57916 http://www.nmlsconsumeraccess.org/

-- Some products and services may not be available in all states. Credit and collateral are subject to approval. Terms and conditions apply. This is not a commitment to lend. Programs, rates, terms and conditions are subject to change without notice. The content in this marketing advertisement has not been approved, reviewed, sponsored or endorsed by any department or government agency. Rates are subject to change and are subject to borrower(s) qualification.

Fill out my form!