1. What is the Fannie Mae Income Calculator?

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

Purpose: It helps potential homebuyers understand if their income can support a mortgage under Fannie Mae's guidelines.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• DTI — Debt-to-Income ratio (as decimal)
• Monthly Debts — Your recurring monthly debt payments
• Mortgage Payment — Estimated monthly mortgage payment
• Monthly Income — Your gross monthly income

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

3. Importance of DTI Calculation

Details: Your DTI ratio is a key factor lenders use to assess your ability to manage monthly payments and repay debts.

4. Using the Calculator

Tips: Enter all monthly debt payments (credit cards, car loans, etc.), your estimated mortgage payment, and gross monthly income. All values must be > 0.

5. Frequently Asked Questions (FAQ)

Q1: What is considered a good DTI ratio?
A: While 45% is Fannie Mae's maximum, many lenders prefer ratios below 36% for better rates.

Q2: Does this include taxes and insurance?
A: Yes, your mortgage payment should include PITI (Principal, Interest, Taxes, and Insurance).

Q3: What if my DTI exceeds 45%?
A: You may need to pay down debts, increase income, or consider a smaller mortgage.

Q4: Is gross or net income used?
A: Lenders use gross (pre-tax) monthly income for DTI calculations.

Q5: Are there exceptions to the 45% rule?
A: Some loan programs may allow higher DTIs with compensating factors like excellent credit or significant savings.