Calculating the Debt to Income Ratio

Understanding the Calculation of Debt to Income Ratio for FHA Loans

One of the main pieces of an FHA loan approval is the borrower’s debt to income calculation. It is important that home buyers understand how this number is calculated and what they can do to improve their chances of getting approved.

Payments Included in Debt Ratios

Certain payments must be considered as part of a person’s overall debt when calculating the ratios. Items such as:

  • Payments for car loans
  • Payments on credit cards
  • Payments on unsecured loans
  • Child support payments
  • Alimony

Items Excluded from Debt Ratios

There are also some items not included in the debt to income ratio for FHA loans. Common examples would be:

  • Current rent payment
  • Money spent on entertainment
  • Expenses paid for child care

How to Overcome High Debt to Income Ratios

If a borrower has a compensating factor, it is possible for people with ratios higher than the proposed guidelines to get an approval for an FHA loan. Here are some examples of compensating factors:

  • Paying more than 10% of the purchase price as a down payment
  • Using income and expense records from the past two years to demonstrate that you have the ability and discipline to pay the housing expense
  • Having a large balance in a savings, investment or retirement account

For people that have a high debt to income ratio, it is possible to reduce the numbers. Paying off debt, such as credit cards or car loans can help. Sometimes it may be necessary to sell an expensive vehicle and get a cheaper payment in order to qualify for a loan.

If you would like additional FHA information visit our FHA Loans page or if you would like to see if you qualify, please contact us or apply online.

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Filed under: FHA Loans, Florida Blog

Luke Skar

Luke Skar is the web developer and content strategist for, serving 47 states including Wisconsin, Illinois, Minnesota, and Florida. Guided by his 19-plus years of various mortgage marketing experience, Luke provides top-quality SEO services, effective social media management, and web development and maintenance. Luke’s career in the mortgage industry began back in 2001, as a loan processor. After becoming a loan officer for a number of years, Luke is now the sole owner/operator of To ensure that all the information he posts is fresh, accurate, and up-to-date, Luke relies on the knowledge which his years of dedication to keeping up with the constant change that the mortgage industry provides.


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