Loan Glossary

Debt Ratio:

One of several financial calculations performed by your lender to determine if you can afford a particular monthly payment. The debt ratio (also known as the obligations ratio) is the sum of all of your monthly debt payments including your total monthly mortgage payment divided by your total monthly income. Typically acceptable debt ratios for Conventional Loans are 36-38%, FHA Loans are 41-43%, and VA Loans are 41%.