What is the maximum housing expense ratio for borrowers qualifying for an FHA loan?

The maximum housing expense ratio for borrowers qualifying for an FHA loan is set at 31%. This ratio refers to the percentage of a borrower's monthly gross income that can be allocated toward housing expenses, including the mortgage payment, property taxes, and homeowners insurance. FHA loans are designed to help borrowers with lower to moderate incomes secure financing, and this ratio helps ensure that they do not become over-extended financially with their housing costs. By maintaining this limit, lenders aim to promote responsible borrowing and reduce the risk of default.

Other options present higher ratios, which may not align with the FHA's guidelines aimed at maintaining affordability for borrowers. This 31% cap helps balance the borrower's budget and allows room for additional debts they may have, such as car loans or credit card payments.