About the Ratios
- Front-End (Housing): Proposed housing cost ÷ gross income.
- Back-End (Total DTI): (Housing + other debts) ÷ gross income.
- Binding constraint: The lower of the two maximums controls affordability.
FAQs
Front-end measures only housing costs relative to income, while back-end measures housing plus all recurring monthly debt obligations. Lenders assess both and the stricter result typically governs.
Include principal, interest, property taxes, homeowners insurance, mortgage insurance if applicable, and HOA dues. Utilities and maintenance are usually excluded for this ratio.
Yes—use the required monthly payment amounts. For credit cards, use the minimum payment reported, not the current balance.
Each program manages risk differently and publishes guideline targets. Actual approvals may vary depending on compensating factors like high credit scores, reserves, or strong residual income.
The back-end ratio often becomes the binding constraint when there are substantial non-housing debts. You may need a lower housing payment, higher income, or debt reduction to qualify.
Increase income, pay down or consolidate debts, extend loan term to reduce monthly P&I, or consider programs with higher allowable ratios—bearing in mind overall affordability and risk.
No. They are guideline targets. Underwriting outcomes depend on many factors including credit, assets, property type, and automated findings.