A comparison or ratio of gross income to housing expenses; With the FHA, the monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non housing debts should not exceed 41% of income. www.hud.gov
Conventional financing limits are typically 28/36
VA limits are only calculated with one DTI of 41. (This is effectively equal to 41/41, although VA does not use that notation.)
* To apply for a Loan Modification you need to take these equations into consideration, if you are out of work Loan Modification is out of the question.
In order to qualify for an FHA mortgage for which the lender requires a debt-to-income ratio of 29/41:
- Yearly Gross Income = $45,000 / Divided by 12 = $3,750 per month income.
- $3,750 Monthly Income x .29 = $1,087.50 allowed for housing expense.
- $3,750 Monthly Income x .41 = $1,537.50 allowed for housing expense plus recurring debt.