Fallon Cloua…, Other/Just Looking in Cranberry Township, PA

what does is front end ratio and back end ratio mean in relation to a mortgage?

Asked by Fallon Clouatre, Cranberry Township, PA Tue Mar 15, 2011

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Hello Fallon,

Front and back end ratios is two types of debt expressed as a percentage os your GROSS monthly income.

The front end ratio is the sum of your monthly mortgage payment including taxes and insurance ( Principal interest taxes and insurance or PITI) as a percentage of your gross monthly income.
If you make $10,000 per month and your payment is $2,000 your front end ratio is 20%.

The back end ratio takes the sum of your PITI and the minimum monthly payments on your credit cards, your car payments, your student loans and any other monthly debt that shows on your credit report, then expresses that total as a percentage of your gross monthly income.


If in the above example you have two $500 car payments and $500 per month in credit card and student loan payments, your back end ratio is now $3500/$10,000 which is 35%.

Call me and I'll tell you what you can afford.

Best Regards,
Alan Openshaw
Cornerstone Lending Inc
720 Second St Pike Suite 104
Southampton Pa 18966
Office 215 953 0800
Fax 215 953 1706
Cell 267 992 7276
Voted Best of Bucks 2010
0 votes Thank Flag Link Tue Mar 15, 2011
The front end ratio is the mortgage amount including principal, interest, taxes and homeowners' insurance (PITI) as it relates to a person/couple's gross monthly income. The back end ratio is the sum of the PITI and all monthly revolving credit minimum monthly payments as a ratio of gross monthly income. Often it is 28% and 35% for front end and back end ratios as a guide for lenders to see the numbers equal a good lending decision but variations due to special circumstances may alter their guidelines. So if your monthly income equals $3000, you could multiply that by 28% to see the maximum mortgage payment likely to be approved as long as the $3000 times 35/36% doesn't exceed the lender's guidelines for approval, too! Hope this helps.
0 votes Thank Flag Link Tue Mar 15, 2011
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