What is the FHA debt-to-income ratio limit at Better Mortgage?

Debt-to-income (DTI) ratios are a measurement of monthly debt compared to monthly income. This ratio gives lenders an understanding of other major financial obligations in a borrower’s life, and is used to determine how much a borrower can afford in a monthly mortgage payment compared to other existing debts. Borrowers below 50% DTI can qualify for an FHA loan at Better Mortgage.

What is a Good Debt-to-Income Ratio for an FHA Loan?

The maximum DTI ratio allowed for an FHA loan varies by lender and is typically between 43% to 50%. At Better Mortgage, there are circumstances where up to 57% is allowed. This means that no more than 57% of your gross monthly income should be allocated to your total monthly debt payments, including your potential new mortgage.

Lenders may allow for a DTI ratio over 43% in certain circumstances when there are strong compensating factors present. These could include a larger down payment, substantial cash reserves, or a history of making similar housing payments with no issues.

That said, a DTI ratio below 43% for an FHA loan is generally considered sufficient and can increase your chances of loan approval. A lower DTI ratio shows lenders that you have a good balance between your debt and income, suggesting that adding a mortgage payment to your financial obligations would be manageable.