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Knowledge Center

You hand over your pay stubs, your tax returns, bank statements, photo identification and anything else that's been requested. Images of a frowning person with an enormous "Denied" stamp plague your dreams as you wait for news. Minutes feel like hours, hours like days, days like... okay we get the picture. It can be nerve-racking not knowing what's happening behind the scenes once you've submitted a mortgage application.

In truth, qualifying for a mortgage is a matter of matching up your income and your debts with equations so that your mortgage lender sees that you'll be likely to pay back your loan. The most important factors are usually these:

Housing Ratio

Housing Ratio equals Housing Payment, or principal, interest, taxes and insurance, divided by Gross Monthly IncomeThis is your total monthly housing payment as a percentage of your gross monthly income. Your total housing payment consists of principal, interest, property taxes, hazard insurance, mortgage insurance (if applicable) and any condo, co-op or Home Owners Association fees.

Debt Ratio

Total Debt Ratio equals Housing Payment, or P.I.T.I., plus Recurring Monthly Debt, divided by Gross Monthly IncomeThis is your total monthly housing payment plus recurring monthly debts as a percentage of your gross monthly income. Other debts include all other payments such as cars, credit cards, student loans, personal loans, retirement savings loans, etc.

How High Can They Go?

It varies by loan program and other factors, but the approximate range for your debt ratio is from approximately 33% to 43%.


If your total gross income is $5,000 per month, your total housing payment plus recurring monthly debt payments should not exceed approximately $1,650 for 33% ratio or $2,150 for a 43% ratio.

What's Right for Me?

The truth is, everyone is different. Some people are comfortable using a higher percentage of their income, and others are not. Family size, other expenses and lifestyle can all have an impact. These are topics you review with your loan officer during pre-qualification, so bring your questions. The goal is to find a payment and purchase price that will be comfortable for you.

For information purposes only and is not a commitment to lend. Programs, rates, terms and conditions are subject to change at any time. Availability dependent upon approved credit and documentation, acceptable appraisal, and market conditions. Not all programs available in all areas. Residential Mortgage Services, Inc. is a Maine Corporation headquartered at 24 Christopher Toppi Drive, South Portland, ME 04106. NMLS #1760;; Visit for list of state licenses. Equal Housing Opportunity.