Generally, an FHA lender will want your monthly mortgage payment to total no more than 29% of your monthly gross income (i.e., income before taxes and other paycheck deductions are taken out). With a conventional loan, the qualifying ratio may allow only 28% of monthly gross income toward housing costs (also called PITI for mortgage payments that include principal, interest, taxes, and [homeowners'] insurance) and 36% toward housing costs (PITI) and other debts, such as car or student loan payments, alimony, or child support. The mortgage payment, combined with non-housing debts, should total no more than 36% to 41% of gross income (depending on the type of loan).
Lenders also consider cash available for a down payment and closing costs, credit history, etc. when figuring your maximum loan amount. Special loan programs for qualified first-time borrowers and others may have varying qualification ratios, so it is best to check out each lender's individual criteria.
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