Calculate Your Back-End Ratio for Mortgage Approval

A back-end ratio is a measure used by mortgage lenders to determine the portion of the borrower’s monthly income that goes toward paying off debts. Also known as the “debt to income ratio”, the measure includes such things as credit card and other loan payments, child support, and mortgage payments.

The calculation for the back-end ratio can be written as:

Back-end Ratio = Total Monthly Debt / Gross Monthly Income

Generally speaking, lenders prefer to see a back-end ratio of less than 36%. But some lenders will make exceptions and approve loans to borrowers with back-end ratios of up to 50% if the borrower shows a very good credit history. In these scenarios, though, the borrower should be cautious as carrying a debt load this high can lead to financial problems.

While some lenders evaluate a borrower’s back-end ratio only, other lenders look at it in conjunction with the front-end ratio.

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The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax advisor.

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