Debt to Income Ratio

Front-End Debt to Income Ratio

The front-end ratio is the percentage of income that pays housing costs. If you are a renter, the front-end ratio is the percentage of income that pays the monthly rent. If you are a homeowner, the front-end ratio is the percentage of income that pays your mortgage principal and interest, property taxes, mortgage insurance premium, hazard insurance and homeowners’ association fees.

Back-End Debt to Income Ratio

The back-end debt to income ratio is the percentage of income that pays your recurring debt payments, such as credit card payments, car loans, student loans, personal loans, child support or alimony payments, legal judgments, or other fixed expenses