Debt-to-Income

When mortgage companies are qualifying you for a mortgage, they look at two types of debt-to-income ratios – Front end and Back end ratios.

Front end ratio-This is figured by dividing your monthly income by your new proposed mortgage payment.

Back end ratio – This is figured by dividing your monthly income by your total monthly debt (including your new proposed mortgage payment). Your monthly debts may include auto payments, credit cards, installment loans, etc. They do not include cable, electric, insurance, cell phones, or items like that.

Each loan type has different limitations for the front and back end ratios. Usually the front end ratios range around 29-31%, where the back end ratios range around 41-43%.

Call me today for more details!

Danielle Hifko
New American Mortgage
910-581-6398