Mortgage Loan Prequalification Calculator | Income & Debt Calculator

Mortgage lenders use a debt to income calculation to determine the maximum mortgage payment for FHA, VA and conventional loans. Conventional loans are mortgages that meet Fannie Mae and Freddie Mac's underwriting guidelines. Here's what all this means.

FRONT END RATIO:

Your mortgage payment is a percentage of your GROSS monthly income.

The front end ratio (monthly payment) for an FHA mortgage is generally recognized as 29% of the gross monthly income. For conventional mortgages, 28% is desired, and the VA does not have a payment ratio. The VA looks at payment, monthly income and housing expenses. You will be qualified on principal and interest, 1/12 of the annual real estate taxes and homeowners insurance, private mortgage insurance or monthly mortgage insurance, and condo or homeowners association fee. All of these components should meet the payment or front end debt ratio.

BACK END RATIO:

The back end ratio is the combination of the monthly mortgage payment and all of your monthly debts (i.e. credit cards, school loans, car payment, alimony, child support, etc.). Most lenders desire a 41% back end ratio for FHA loans, 36% for conventional loans, and 41% for VA mortgages. Example: $3,000 monthly income X 29% (FHA) = $870 payment. $3,000 monthly income X 41% (FHA) = $1,230 (includes $870 payment & $360 monthly debt. Now here's where it gets tricky. The applicant should not exceed the ratios. Using the previous example, let's say your debt is $500 per month not $360, that means your mortgage payment needs to be less so that your back end or debt ratio does not exceed 41%. Example - $3,000 monthly income X 41% (FHA) = $1,230 less $500 monthly debt = $730 monthly payment. The greater the monthly debt, the lower your monthly mortgage payment. But what if you do not have any debt? Your maximum mortgage payment is 29% of your gross monthly income or $870. A WORD OF CAUTION! Only a professional mortgage loan officer can calculate your monthly gross income and monthly debt. The debt to income calculator is intended to give a general understanding of your "ideal" mortgage payment. This debt to income calculator will estimate the "ideal" mortgage payment for prequalification purposes.