|Front End Ratio Details||Amount|
|Front End Ratio Limit You Entered:||28.000%|
|Monthly Principal & Interests:||$1,088.02|
|Monthly Real Estate Taxes:||$250.00|
|Monthly Homeowner's Insurance:||$125.00|
|Max Allowable Monthly Homeowner Expenses (@ 28.000% FER):||$1,463.02|
|Back End Ratio Details||Amount|
|Back End Ratio Limit You Entered:||36.000%|
|Max Allowable Monthly Debt Payment Amount (@ 36.000% BER):||$418.00|
|Above uses the 8% between your stated 28.000% front-end limit & 36.000% back-end limit|
|Required Monthly Income:||$5,225.06|
|Required Annual Income:||$62,700.68|
Understanding Your Results
If your monthly income is higher than $5,225.06 (or your annual income is above $62,700.68) you should qualify.
If your income is lower than this, you may need to do one of the following: look for a cheaper home, save a higher downpayment, or look for a lender which will lend to higher DTI limits.
Our guide below discusses front end & back end limits for various loan types, as well as how the CFPB proposed shifting from DTI ratio to using loan pricing info for loan qualification.
If you have finally found your dream home and you haven't pre-qualified for a loan yet in order to see how much you can afford when it comes to buying your home, you can work backwards instead. By plugging in certain information, such as the cost of the home, how much the interest rate on the loan is likely to be, and how much you will pay as a down payment, you can determine how much your income will need to be to qualify for the mortgage loan on the home you love.
For example, if the home you are looking at costs $312500.00 and you plan to put $62,500.00 down on a 30 year loan with a 3.250% interest rate, your total payment on the principal and interest will be $1,088.02. If your annual property taxes are $3,000.00 and your annual insurance is $1,500.00, that will bring your total monthly payment to $1,463.02. With a monthly payment of this amount, your total gross monthly income will need to be at least $5,225.06 in order to qualify for the loan.
Estimated front and back ratios helps you to limit your housing and necessary living spending.
Front ratio is a percentage of your gross income that you can spend on all housing related expenses, including property taxes and insurance. Back ratio is a percentage of your gross income that you can spend on your housing expenses plus cost of shelter: food, clothes, gas, etc.
Front / back ratios with values of 28-33 / 36-42 considered conservative these days, values bigger than 35 / 45 called aggressive and not recommended for use.