how a housing expense ratio works
the housing expense ratio also called a front end ratio is the metric that mortgage lenders use to evaluate whether you can afford a mortgage you get this number by dividing the amount of money you re paying toward monthly housing expenses by your monthly gross income and multiplying by 100 1housing expenses can include your mortgage payment as well as the costs of mortgage insurance and property taxes this ratio is typically along with other ratios like your debt to income when a lender determines what size loan you qualify for income ratios are an essential component of the underwriting process and can keep you from receiving credit approval even with a good credit score if you are considering a mortgage or other kind of loan figuring out your housing expense ratio can be a useful to help you understand how much money you can afford to borrow housing expense ratio vs debt to income ratiothe housing expense ratio is also referred to as the front end ratio because it is a primary component of your total debt to income ratio the housing expense ratio may be considered first in the underwriting process for a mortgage loan 2the housing expense ratio requires that you provide your pre tax income or gross income which is an essential factor for both the housing expense ratio and the broader debt to income ratio 