Each type of mortgage program has guidelines for debt to income ratios. To
calculate these ratios, start with your gross monthly income. Calculate your
total mortgage payment, including taxes, insurance and mortgage insurance. This
payment amount as a percentage of your monthly income is your "front end
ratio". Now add your other monthly debts to your mortgage payment. Do not
include utilities, groceries, or other expenses that are not debts. This amount
as a percentage of your monthly income is your "back end ratio." If a
loan program has ratios of 28/36, this means that the front end ratio guideline
is 28% and the back end ratio guideline is 36%. These ratios are guidelines only
and may be stretched in some cases if compensating factors exist.
