1. What is the Fannie Mae Income Calculator Worksheet?

Definition: This calculator determines if a borrower meets Fannie Mae's debt-to-income (DTI) ratio requirements for mortgage approval.

Purpose: It helps lenders and borrowers evaluate mortgage eligibility based on income and existing debt obligations.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• DTI — Debt-to-Income ratio (decimal)
• Monthly Debts — Total recurring monthly debt payments (USD)
• Mortgage Payment — Proposed monthly mortgage payment (USD)
• Monthly Income — Gross monthly income before taxes (USD)

Explanation: Fannie Mae typically requires a DTI ratio of 45% or less for conventional loan approval.

3. Importance of DTI Calculation

Details: The DTI ratio is a key metric lenders use to assess a borrower's ability to manage monthly payments and repay debts.

4. Using the Calculator

Tips: Enter all monthly debt obligations (credit cards, auto loans, etc.), the proposed mortgage payment, and gross monthly income. All values must be ≥ 0.

5. Frequently Asked Questions (FAQ)

Q1: What debts should be included?
A: Include all recurring monthly debts: credit cards, auto loans, student loans, personal loans, and other mortgage/rent payments.

Q2: Is 45% the maximum DTI allowed?
A: While 45% is the standard, exceptions may be made up to 50% with strong compensating factors like excellent credit or significant reserves.

Q3: How is monthly income calculated?
A: Use gross income (before taxes) from all sources. For variable income, use a 2-year average.

Q4: Does this include property taxes and insurance?
A: Yes, the mortgage payment should include PITI (Principal, Interest, Taxes, and Insurance).

Q5: What if my DTI is too high?
A: Consider paying down debts, increasing income, or looking for a less expensive property.