Front-End Debt-To-Income Ratio

The front-end ratio, also commonly referred to as the housing ratio or the mortgage to income ratio, measures what percentage of a person's income goes towards their mortgage. It's a metric that lenders use to evaluate risk when screening potential clients because it gives insight into how likely it is that a person will be able to repay a loan. A low front-end ratio suggests you have sufficient income to cover your expenses and pay off your mortgage, while a high ratio means you may be more likely to default on a loan, and lenders will be more reluctant to loan you money.

The debt-to-income ratio is a good indicator of how much mortgage you can afford and signals how well you can handle debt. A good DTI may help you qualify for a mortgage, but don't panic if your front-end ratio isn't perfect. It's not the only piece of the puzzle. Lenders look at multiple criteria when evaluating applicants such as their income, credit score, savings accounts, debt obligations, and more.

Calculating your front-end ratio is easier than you may expect. Simply divide your monthly mortgage payment by your gross monthly income and multiply that number by 100. For example, if your monthly mortgage payment was $2,200, and your gross monthly income (before taxes) was $7,800, then your front-end ratio would be ($2,200 / $7,800) * 100 = 28%.


For this formula the mortgage payment includes PITI (principal, interest, taxes, insurance), mortgage insurance, HOA fees, and all other home related debt obligations.

It's important to note that the front-end ratio only considers housing expenses and doesn't consider any other forms of debt such as student loans, car payments, child support, or payments on rental properties. If you have other debts like this and are applying for a loan, it is important to also look at the back-end DTI ratio, which accounts for all forms of debt.

Perhaps the quickest and easiest way to calculate your front-end debt to income ratio is to use a free online calculator like the one at the top of this page.

You now know what the front-end ratio is and why it's used. You also know the internals of how it is calculated and have probably used the calculator tool at the top of this page to figure out what your number is. If so, you may be wondering what a good front-end ratio is?

In most cases when applying for a loan the lender will want to see a front-end ratio that is less than 28%. However, if you're applying for an FHA loan the cutoff is typically 31% instead of 28%. This shows you have a health relationship with debt and most likely won't be overburdened with a mortgage payment.

When it comes to DTI ratios, lower is better. A lower ratio may help you qualify for a mortgage easier and may allow you to borrow more money if needed.

If you find yourself in a situation where your debt-to-income ratio is preventing you from getting a loan, don't give up hope. That are several ways you can attempt to improve your situation. Some methods that may be worth pursuing include looking at different loan options, paying off debts or restructuring those debts to have smaller monthly obligations, getting a cosigner on your loan, increasing your income with a second job or a side hustle, or shopping for a lower mortgage rate. These strategies can lower your DTI ratio and help you qualify for a mortgage.