1. What is Front End Ratio?

The Front End Ratio, also known as the mortgage-to-income ratio, is a key metric used by lenders to determine how much of a borrower's gross monthly income is dedicated to mortgage payments. It includes Principal, Interest, Taxes, and Insurance (PITI).

2. How Does the Calculator Work?

The calculator uses the Front End Ratio formula:

Where:

• \( PITI \) — Monthly mortgage payment including principal, interest, taxes, and insurance ($)
• \( Income \) — Gross monthly income ($)

Explanation: The formula calculates what percentage of your monthly income goes toward your mortgage payment.

3. Importance of Front End Ratio

Details: Lenders typically prefer a front end ratio of 28% or less. This ratio helps determine mortgage affordability and is a critical factor in loan approval decisions.

4. Using the Calculator

Tips: Enter your total monthly PITI payment and gross monthly income in dollars. All values must be valid positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is included in PITI?
A: PITI includes Principal (loan amount), Interest (loan interest), Taxes (property taxes), and Insurance (homeowner's insurance and possibly mortgage insurance).

Q2: What is a good front end ratio?
A: Most lenders prefer a front end ratio of 28% or less, though some programs may allow up to 31%.

Q3: How does front end ratio differ from back end ratio?
A: Front end ratio only considers housing expenses, while back end ratio includes all monthly debt obligations (credit cards, car loans, student loans, etc.).

Q4: Can I get a mortgage with a high front end ratio?
A: It's possible with strong compensating factors like excellent credit, significant savings, or low debt-to-income ratio, but generally more difficult.

Q5: Does front end ratio include HOA fees?
A: Typically, HOA fees are included in the front end ratio calculation as they are considered part of housing expenses.