Mortgage Front End Ratio Calculator

Front End Ratio Formula:

\[ FER = \frac{M}{I} \]

Front End Ratio (%):

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1. What is a Mortgage Front End Ratio?

Definition: The front-end ratio compares your monthly mortgage payment to your gross monthly income, expressed as a percentage.

Purpose: Lenders use this ratio to assess your ability to afford mortgage payments relative to your income.

2. How Does the Calculator Work?

The calculator uses the formula:

\[ FER = \frac{M}{I} \times 100 \]

Where:

\( FER \) — Front-end ratio (percentage)
\( M \) — Monthly mortgage payment (USD)
\( I \) — Monthly gross income (USD)

Explanation: The mortgage payment is divided by monthly income and multiplied by 100 to convert to a percentage.

3. Importance of Front End Ratio

Details: Most lenders prefer a front-end ratio of 28% or less, though some may accept up to 35% for qualified borrowers.

4. Using the Calculator

Tips: Enter your total monthly mortgage payment (including taxes and insurance) and your gross monthly income before taxes.

5. Frequently Asked Questions (FAQ)

Q1: What's a good front-end ratio?
A: Generally, 28% or lower is considered good, while ratios above 35% may make loan approval more difficult.

Q2: How does this differ from back-end ratio?
A: Back-end ratio includes all debt payments, while front-end ratio only considers housing costs.

Q3: Should I include property taxes and insurance?
A: Yes, lenders typically include PITI (Principal, Interest, Taxes, Insurance) in this calculation.

Q4: Can I improve my front-end ratio?
A: Yes, by increasing income, reducing mortgage amount, or finding a lower interest rate.

Q5: Do lenders only look at front-end ratio?
A: No, they consider multiple factors including credit score, back-end ratio, and down payment amount.