What is the maximum allowable Housing Ratio to qualify for an FHA loan?

The maximum allowable Housing Ratio to qualify for an FHA loan is 31%. This ratio, also known as the front-end ratio, refers to the percentage of a borrower's gross monthly income that can be used to cover housing expenses, including mortgage payments, property taxes, homeowners insurance, and any applicable mortgage insurance premiums.

FHA guidelines indicate that lenders should ideally keep the housing costs at or below this percentage to help ensure borrowers do not become over-leveraged and can manage their monthly payments responsibly. Adhering to this guideline is crucial for maintaining financial stability and reducing the risk of default.

Understanding this ratio is important for potential FHA loan applicants, as it directly impacts their eligibility and the amount they can borrow for housing costs.