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| MHQ Homebuyers Guide
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Calculate Your Debt Ratio
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| Your debt ratio is defined as:
fixed monthly expenses divided by monthly take-home income. For example, if your fixed
expenses ( utilities, car payment, credit card payment etc) are $1,000 a month, and you
take home pay is $3,000 a month, your debt ratio is 1,000/3,000 or 33%. Most companies are
looking for a ratio of 50% or less, so the example has room for a $500/month house
payment. 1,500/3,000 =50% Different lending institutions can use slightly different criterion for calculating and evaluating the debt ratio.
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