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Sam · Posted: Wed Jun 30, 2004 2:25 am Post subject: Housing Expense Ratio

Housing Expense Ratio or Front-End Ratio calculates how much of your gross monthly income will be used to make mortgage payment. It is evaluated as an individual's monthly housing expense or mortgage payment divided by his monthly gross income. It is expressed in terms of percentage.

To Sum up,

Guest

i need this for an assignment at school but i dont understand it!

jerry · Posted: Sat Oct 25, 2008 2:08 am Post subject:

Hi haley Sytsma!

Housing expense ratio is used to calculate a person's monthly mortgage payments. These payments depend on the gross monthly income. This is also known as front end ratio.

To calculate the Housing expense ratio, you will need the following formula:
Housing Expense Ratio = Monthly Housing Expense / Monthly Gross Income

The monthly housing expense in this formula includes principal amount , real estate taxes, interest as well as the homeowners insurance. Generally it is said that the housing expense ration should not exceed 28% of a person's gross monthly income.

Thanks,

Jerry

chrisburns · Posted: Mon Nov 10, 2008 6:48 am Post subject:

very good explantion Sam.

morabito · Joined: 22 Aug 2009 Posts: 14 5.14 Dollars($)

"For Example, A home-buyer makes $1,20,000 a year. The maximum amount of monthly mortgage-related payment at 28% of gross income would be $2,800. Thus, the homebuyer would be approved for a mortgage which requires a maximum monthly mortgage payment of $2,800."

This is sort of misleading. Shouldn't the $2,800 also include PMI, insurance, and property tax???

eric1 · Posted: Fri Dec 04, 2009 11:21 am Post subject:

Yes that payment of $2,800 SHOULD also include taxes, insurance and PMI if applicable. Meanwhile, the quote of 28% is also low. Reality is that low to mid 30's range is getting appoved every day.

gmakerley · Posted: Fri Dec 04, 2009 3:50 pm Post subject:

we've seen queries from folk who read some of the older posts on the site and take things from them as gospel. we've got to all continue to recognize that many of the things said here have become outdated.

Guest

check your math 28% of $120,000 is $33,600 not $28,000.

gmakerley · Posted: Thu Jul 15, 2010 9:41 am Post subject:

Dan, we're talking about monthly payments here. Yes, your math is impeccable, but when breaking it down monthly, a payment of $2800 is 28% of monthly income of $10,000.

Guest

what does it make for an hourly rate of $35 for full time consultant?
I am trying to understand if I am qualify for Loan modification. My housing expense is 1785 monthly. (I can make OT sometime but not certain. What certain is I don't get paid during holidays.

I was told than if the rate is > 31%, I get get 2-3% rate down for my mortgage. Of course I will not pay them up front unless they get the rate saves a few hundreds.

Thanks for advise.
Cage

gmakerley · Posted: Wed Dec 22, 2010 8:18 am Post subject:

Cage, it seems you're working with these for-profit outfits that ask you to pay them up front for their help in getting you a modification. BEWARE!

You'll be wasting lots of money when they fail to come through for you, so I suggest you find a lawyer if you need one, who'll only ask for a retainer; or a non-profit organization (check HUD for one near you).

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