**Two Lender Formulas**

Most lenders will require that loan
applicants meet **both** guidelines before
approving a mortgage loan. The first formula compares income to housing costs without
including long term debts, the second includes all debts.

**28% Formula**

Total Monthly Housing Costs

(P I. T I.)

__________________ = 28% (or less)

Gross Monthly Income

** 36% Formula
**P.I.Tl. + All Monthly Debts

Gross Monthly Income

A variety of other formulas exist. VA and some lenders use a single ratio based on mortgage payment and all debts, which allows easier qualifying for a more expensive home for a borrower with little debt.

To figure your housing budget,
simply multiply your gross monthly income (before taxes) by 28% and 36%. For example, a
family with a monthly income of $3,500 might qualify for a mortgage with payments up to
$980. For specific figures, ask your **Long & Foster** Sales Associate.