loan principal + loan interest
+ property taxes + property insurance (+ Home Owners' Association dues)
annual income ÷ 12 months
A calculation of your total monthly housing expenses divided by your income
Lenders use a front ratio as a guideline to see if you qualify for a loan. Acceptable front ratios vary from lender to lender. You can calculate the total monthly housing costs for a single family home by adding up the loan's principal and interest, property taxes, and property insurance. For condominiums, cooperatives and PUDs, also add the cost of Home Owners' Association dues. Then divide the total by your gross monthly income.
Example: How do you calculate front ratio?
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Total monthly housing expenses loan principal + loan interest + property taxes + property insurance (+ Home Owners' Association dues) |
$1,000 | |
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Gross monthly income annual income ÷ 12 months |
÷ | 5,000 | |
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Front ratio | = | 20% | |
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Compare: Back ratio, LTV
More on: Ratios