June
2007
Interesting article from Bankrate.com
Debt-to-income Ratios
Front-end Ratio
The housing expense, or front-end ratio, shows how much of your gross (pretax) monthly income would go toward the mortgage payment. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income. To calculate your housing expense, multiply your annual salary by 0.28, then divide by 12 (months). The answer is your maximum housing expense.
Maximum housing expense = annual salary x 0.28 / 12 (months)
Back-end Ratio
The total debt-to-income, or back-end ratio, shows how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans and condominium fees. In general, your total monthly debt obligation should not exceed 36 percent of your gross income. To calculate your debt-to-income ratio, multiply your annual salary by 0.36, then divide by 12 (months). The answer is your maximum allowable debt-to-income ratio.
Maximum allowable debt-to-income ratio = annual salary x 0.36 / 12 (months)
Related Articles:
Sponsored By:
- No sponsors for this posts.
Discussion 
Leave a Comment
Speak Your Mind
Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!
