ChemistryWiki | RecentChanges | Preferences
- [Motley Fool Webpage on Brief Info on Mortgages]
- [Motley Fool Home Center]
- Front end ratio
- A common rule of thumb is that they'll allow you to pay around 30% of your gross income toward your mortgage payment every month. This is known as the front-end ratio. In this example, 30% of $4,000 is $1,200 a month
- If 100K, up to 2.5K
- Back-end ratio (or debt ratio)
- Your debt ratio, or back-end ratio, on the other hand, is $400/$4,000, or 10%. That's not bad. They don't want more than around 40% of your gross income going to total debt -- mortgage, credit card interest, pensions and other payments -- and in this case, your payments add up to 39%. (These ratios can vary somewhat; the ones given here are just examples).
- Debt > than 10% so feel should be closer to 2K
- [Mortgage Calculator Webpage]