Articles and news about FHA loans and HUD requirements. FHA loans are great for first-time homebuyers.

FHA Loan Questions: Debt-To-Income Ratios

When you apply for an FHA home loan, you’re required to list all current debts and other financial obligations. This helps the lender calculate the debt-to-income ratio, which must fall within the FHA required percentage. Borrowers should know what the FHA and say about the debt-to-income ratio percentages;

“…monthly mortgage payments should be no more than 29% of gross income, while the mortgage payment, combined with non-housing expenses, 4 should total no more than 41% of income. The lender also considers cash available for down payment and closing costs, credit history, etc. when determining your maximum loan amount.

Borrowers should be concerned with the amount of debt they currently have before applying for an FHA home loan. Paying off credit cards and closing unneeded open lines of credit should be a priority for borrowers in the year leading up to the FHA mortgage loan application.

With these things in mind, one reader asks an important question about how the FHA and the lender view certain types of debt.

“We have about 10-11 payments left on the car loan? Years ago, if a car loan was under one year remaining, it was not counted as part of the regular debt-to-income, is that still true today?”

FHA loan rules address this issue very specifically. According to the FHA, “When computing the debt-to-income (DTI) ratio, the lender must include the following recurring obligations:

8 Responses to FHA Loan Questions: Debt-To-Income Ratios

  1. Sallyise Lee says:

    i would like to know trough FHA special programs if I could qualify for a special program loan i pay a thousand dollars a month renr and i need ahome i found a home for 50,000 can you help me i am a senior citizen on a fix income all my money goes for rent help please respond

    • Joe Wallace says:

      Have you tried contacting a lender or calling the FHA directly? You might try pre-qualifying for an FHA home loan at a participating FHA lender ( is a private company that can pre-qualify you for a home loan to see how much you may be eligible for based on income, credit and other criteria.) You can also visit for contact information or dial 1 800 CAll FHA or (800) 225-5342.

      PS For most FHA loans there is a minimum 2 year waiting period following a Chapter 7 bankruptcy, but you should contact the FHA for more information as it relates to foreclosure avoidance programs to see what requirements might be in that area.

  2. Peppy says:

    Applying for an FHA Loan and was told that the assistance with closing costs on my loan floats. One day it could be 5.0% or 4.0%. Is that true?

    • Joe Wallace says:

      Hi Peppy, thanks for your question. Are you referring to the percentage of seller contributions toward closing costs permitted under the FHA loan or are you asking about something else?

  3. Mac S. says:

    Hi, Typical monthly payment on average price house($225000) is about $1200. so it is reasonable to have $3600 income. But the system is flawed on higher loans. for example on my $750k mortgage they’re asking for minimum of $15000/mo income to qualify. my monthly mortgage payment aside 95% of all my other expenses are identical to other households. why do i need to have $10k+ disposable income per month? isn’t about 30% equity and over 12 years payment record enough to proof them wrong.

    • Joe Wallace says:

      It all depends on the percentage of your debt-to-income ratio. The lender examines the amount of verifiable income versus amount to total monthly obligations when calculating the loan. Did your lender tell you what your debt-to-income ratio works out to be?

  4. Karen W says:

    Please tell me–I had a horrific accident, couldn’t keep my job, lost my house and went through chapter 11 bankruptcy. I now healthy and working, plus I have retirement benefits. I have no debts at all. Can I qualify for a loan?

    • Joe Wallace says:

      You should discuss your situation with a loan officer as much depends on how long ago the bankruptcy was discharged and other related factors. Have you tried pre-qualifying for an FHA loan? You can pre-qualify at (a private company and not a government agency).

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