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You may see conventional loan debt limits referred to as the 28/36 qualifying ratio. Those numbers refer to two percentages that are used to examine two aspects of your debt load.

 The First Number, 28% 

This number indicates the maximum percentage of your monthly gross income that the lender allows for housing expenses. The total includes payments on the loan principal and interest, private mortgage insurance, hazard insurance, property taxes, and homeowner's association dues. (Often referred to by the acronym PITI.)

 The Second Number, 36% 

This number refers to the maximum percentage of your monthly gross income that the lender allows for housing expenses plus recurring debt.
Recurring debt includes credit card payments, child support, car loans, and other obligations that will not be paid off within a relatively short period of time (6-10 months).

 Debt to Income Example 

Yearly Gross Income = $45,000 / Divided by 12 = $3,750 per month income
$3,750 Monthly Income x .28 = $1,050 allowed for housing expense
$3,750 Monthly Income x .36 = $1,350 allowed for housing expense plus recurring debt.

 Not All Loans Are the Same  

FHA loan ratios are typically 29/41, allowing a higher debt load for both housing expenses and recurring debt.
For the above example, FHA would allow $1087 for housing and $1538 for housing plus recurring debt.
For a VA loan, the debt to income ratio should not exceed 41% of your monthly gross income.



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