Debt-to-Income Ratio Questions

I had somebody write in after I discussed conventional and FHA mortgages after a bankruptcy.  I represented them as a Chester County bankruptcy lawyer.  

They wanted to know two things:

1)  What is the debt-to-income ratio?  

2)  What number do the mortgage companies like to see?

First, the debt-to-income ratio is the measure of your debt payments to the recurring monthly income you have.  The higher the number/ratio the more difficult it is for a person to meet their debt obligations.  It is expressed as a decimal or a percentage.  If you have no debt payments, your debt-to-income ratio will be 0.  

You can find a pretty rudimentary calculator for the debt-to-income ratio here.  

For mortgages, FHA mortgages don't like to see anything higher than 28% on FHA mortgage loans for the debt-to-income ratio.  For conventional mortgages, it normally can't be higher than 36%.