Calculator: Income-Debt Ratios

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Housing / Debt Ratio Calculation

Step 1::
Calculate Your Housing Ratio

lenders use two ratios to approve the amount they will lend you:
1. housing ratio
2. debt-to-income ratio
the "housing ratio" is calculated by dividing monthly housing expenses by your gross monthly income. The housing ratio should not exceed 28%.
monthly housing expenses includes real estate taxes, insurance, etc. If you don't have your real estate tax or insurance figures, the American Housing Survey shows that the median taxes paid averaged $12 per $1,000 in home value (divided by 12 months). The property insurance paid averaged $30 per month.

You may contact your local community and county officials to determine your true county and city tax factor:

You can lookup your property tax assessments by community:
http://www.statelocalgov.net

Private Mortgage Insurance (PMI) will be required if your down payment is less than 20% of the home purchase price. Your PMI monthly cost will average 0.005 of the borrowed amount divided by 12.
if you fail to pass either ratio, you may need to adjust your loan request to bring your ratios within approved parameter

Enter the estimated monthly mortgage payment or loan parameters below:

Mortgage loan amount:
Number of months to repay:
Home mortgage loan rate (APR):	%

Estimated Taxes per Month (annual assessment divided by 12):

Estimated Insurance per Month (annual premium divided by 12):

Estimated Other Expenses per Month:

Total Monthly Income:

Housing Ratio (should be around 28% or less):

Step 2:: Calculate Your Debt-to-Income Ratio calculated by dividing your fixed monthly debt expenses by your gross monthly income. As a basic rule, the debt ratio should not exceed 36%.
Estimated Total Housing Expense (from above):
Total Monthly Installment Loan Payments (auto, student, other):
Total Monthly Credit Line Payments (credit cards, credit lines):
Monthly R. Estate Non-Income Loan Payments:
Monthly Alimony and Child Support Payments:
Monthly Tax and Legal Assessments:
Monthly Other Payments:

Total Monthly Income (from above):

Debt-to-Income Ratio (should be around 36% or less):	%

* Calculations are based upon the assumptions you entered. Please note that rounding errors can make a small difference in calculations. Your actual mortgage lending rate may vary depending on your credit quality and lender. The circumstances surrounding your credit and loan qualifications may result in different calculations.

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