DTI (Debt-to-Income) Ratios for FHA-backed Loans

The Federal Housing Authority revises the guidelines for acceptable DTI (Debt-to-Income Ratio) on FHA-backed loans regularly.  They have increased slightly in the last few years.

In 2013, for example, DTI allowed up to 29% of earnings as real-estate expenses, and 41% in total long-term debts including real estate.

As of 2020, FHA guidelines allow up to 31% in real estate and 43% in total monthly debt payments.

Approval to exceed these ratios is sometimes allowed, if:

  • You can make a large down payment
  • You have large cash reserves
  • Other assets that make a substantial personal net worth
  • Your credit history is especially good
  • The mortgage terms are better than current averages
  • Another organization is providing some of the mortgage funds

Keep in mind that these are maximums, aimed at helping consumers take on sustainable levels of debt.  Consider your long-term situation carefully and don’t think of these ratios as automatic targets.

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