What Is a Housing Ratio

The housing expense ratio, also called the front-end ratio, is a percentage determined by dividing the borrower’s housing expenses by their pre-tax income. At its most basic, it’s a simple number showing how much of your income goes to paying for housing, and considers your mortgage payment, insurance, taxes and more.

What does the housing expense ratio include?

When calculating the housing expense ratio, an underwriter will sum all housing expense obligations of a borrower, including the potential mortgage principal and interest payments, property taxes, hazard insurance, mortgage insurance, and association fees.

What is the FHA borrower's monthly housing expense ratio?

Using this data, the bank and the FHA calculate the borrower’s debt-to-income ratio. How much can that ratio be? According to the FHA official site, “The FHA allows you to use 31% of your income towards housing costs and 43% towards housing expenses and other long-term debt.”