FHA looks very closely at your debt to income ratio. Debt to income ratio is a term used to describe your level of outgoing monthly obligations to your income. It’s important before you decide to buy a home that you already know what your debt to income ratio is, and that you have it under control.
FHA would like to see your debt to income ratio at no more than 31%, and that is with your new monthly mortgage payment with principal and interest, and taxes and insurance. There are some cases in which FHA will allow you to go up to 43%, including other obligations, but FHA will look closely at new accounts you have opened. FHA simply wants to ensure that you have not opened up any new accounts in order to help you fund your down payment or pay off other debts prior to your application.
Your debt to income ratio is important, and you need to be responsible to keep your credit and your debts in order. For more information on the FHA guidelines, and to use the FHA calculator, visit www.fhaloansnow.net.
-Mayer Dallal
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