What is the qualifying HER and TOR ratio for FHA loans?

What is the qualifying HER and TOR ratio for FHA loans?

• A. 28% - 36%
• B. 31% - 43%
• C. 29% - 41%
• D. 41% - 41%

Answer: (B)

FHA loan qualification rests on two debt-to-income limits: the housing expense ratio and the total debt ratio. The housing expense ratio looks at the portion of gross monthly income needed to cover housing costs—principal and interest, property taxes, homeowners insurance, mortgage insurance, and any HOA dues. The total debt ratio adds all other recurring monthly debts (credit cards, car payments, student loans, etc.) to the housing costs and compares that total to gross monthly income. Under standard FHA guidelines, the housing expense ratio can be as high as 31% and the total debt ratio as high as 43%. This combination ensures borrowers have enough income left for other obligations while still meeting the lender’s risk criteria. Other ratio pairings do not reflect FHA standards (they’re more typical of conventional loans), and while there can be exceptions with compensating factors in some cases, the standard FHA thresholds are 31% and 43%.

FHA loan qualification rests on two debt-to-income limits: the housing expense ratio and the total debt ratio. The housing expense ratio looks at the portion of gross monthly income needed to cover housing costs—principal and interest, property taxes, homeowners insurance, mortgage insurance, and any HOA dues. The total debt ratio adds all other recurring monthly debts (credit cards, car payments, student loans, etc.) to the housing costs and compares that total to gross monthly income. Under standard FHA guidelines, the housing expense ratio can be as high as 31% and the total debt ratio as high as 43%. This combination ensures borrowers have enough income left for other obligations while still meeting the lender’s risk criteria. Other ratio pairings do not reflect FHA standards (they’re more typical of conventional loans), and while there can be exceptions with compensating factors in some cases, the standard FHA thresholds are 31% and 43%.