FRU News · Answers
What Debt-to-Income Ratio Do You Need?
How a debt-to-income ratio is calculated, the limits that apply to conventional, FHA and VA loans, and what to do if your ratio is too high.
50 sec · Captions available on the player · Presented by AI-generated presenters, with every line taken from the FreeRateUpdate page it answers.
Source: FreeRateUpdate answer page, Sept. 29, 2026; Fannie Mae, FHA and VA guidelines
Transcript
This is FreeRateUpdate News. I'm Edmund Ledger. Today's question: what debt-to-income ratio do you need to qualify?
Add up your monthly minimum debt payments, including the new one, and divide by your gross monthly income.
The math is the same for a purchase, a HELOC or a cash-out refinance. Paying more than the minimum doesn't change it.
Fannie Mae allows up to 50% through its automated underwriting. Manually underwritten loans generally stop at 36%.
FHA can go further with compensating factors. VA uses 41% as a guideline, not a cap, and looks at residual income.
Ratio too high? Add a co-borrower with qualifying income, borrow less, or document more income you already have.
I'm Edmund Ledger, for FreeRateUpdate News.
What the charts show
Three on-screen tables. How the ratio is calculated: monthly debts are minimum payments including the new housing or HELOC payment, divided by gross pre-tax monthly income, and paying extra does not change the math. Typical limits by program: conventional automated underwriting up to 50%; conventional manual generally 36%, up to 45%; FHA above conventional with compensating factors; VA a 41% guideline, with residual income deciding. If the ratio is too high: add a co-borrower for more qualifying income, borrow less for a smaller new payment, or document income you already have.