What is the maximum debt-to-income ratio for conventional home loans?

Erik Sandstrom

Mortgage Expert - Call 1-619-379-8999
Staff member
Loan Safe Mortgage
Jan 14, 2011
San Diego, California
As of writing this post 1/23/2018 the maximum debt ratio on conventional home loans is generally 50% for borrowers with credit scores above 620. In some cases if a borrower has a prior derogatory event in the past the system may base it's approval or denial on the risk associated to the loan. For example if a borrower has a bankruptcy that is 4 years old and and/or has a derogatory event in the past the system may require the debt ratio of that borrower be lower in order to obtain an approval.

Now the 50% is the back end debt ratio, there isn't really a true front end debt ratio published however typically when you exceed 43% you may not qualify for a new home loan. It's best to run the automated underwriting system in all situations when you are very close to exceeding the maximum debt ratio.

How to calculate debt ratio:
Mortgage Payment + Taxes, Insurance & MI + Minimum monthly payments on debt DIVIDED by your monthly income.

For Example:

New Mortgage Payment: 2500.00/mo
Property Taxes: 350.00/mo
Homeowners Insurance: 100.00/mo

Total Debt: 15,000.00 - Minimum monthly payments: 450.00/mo

Total Income: 10,000.00/mo

2500 + 350 + 100 + 450 = 3400.00
3400 + 450 (debt) = 3850.00

3850 / 10,000.00 = 38.5% Back End Debt Ratio - This borrower in most cases would qualify as they are under the 50% threshold.