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.