finance
housing expense ratio
The housing expense ratio, or front-end ratio, compares a borrower's total monthly housing costs to gross monthly income. Housing costs usually include principal, interest, property taxes, insurance (PITI), and any HOA dues or mortgage insurance. Lenders use it along with the debt-to-income ratio to judge affordability. Acceptable limits vary by loan program, often around 28 to 31 percent.
- Exam tip
- Front-end (housing expense) counts only housing costs; back-end (debt-to-income) adds all other recurring debts. Always use gross, not net, income.
- Example
- A borrower earns $7,500 per month gross, and PITI is $2,100. The housing expense ratio is $2,100 ÷ $7,500 = 28%.
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Last verified: 2026-10-23