Use this calculator to quickly determine both of your debt to income ratios. A table underneath the calculator highlights loan limits for conventional, FHA, VA & USDA loans.
Frontend & Backend Debt Ratio Calculator
Current 30 YR Fixed Mortgage Rates
The following table highlights locally available current mortgage rates. By default 30-year purchase loans are displayed. Clicking on the refinance button switches loans to refinance. Other loan adjustment options including price, down payment, home location, credit score, term & ARM options are available for selection in the filters area at the top of the table.
An Introduction to Debt to Income Ratios
Why Lenders Care About DTI Ratios
No matter how good a person's intents may be, all people eventually run into troubles in life.
People who are nearly maxed out on their monthly living expenses give themselves little room to adjust to sickness in the family, a layoff, an automotive accident, or something else which causes economic hardship.
Lenders typically lend money to people who they believe are likely to pay off their loans in a timely manner. While mortgages are secured by the property they are used to purchase, foreclosing on a home can both be expensive & time consuming.
Lenders like to know that consumers have some economic slack available to help them get through rough patches.
Front End Ratio
The front end ratio can be thought of as what portion of your paycheck goes toward paying for your monthly residential living expenses. It includes the cost of any loan payments along with other required expenses tied to the property including property taxes, homeowners insurance along with any homeowners association dues.
As a general rule of thumb a front end ratio of 28% or below is considered highly desirable, though lenders may allow higher levels for borrowers with strong profiles.
Back End Ratio
The back end ratio can be thought of what portion of your paycheck goes toward paying your monthly residential living expenses AND other debt obligations.
As a general rule of thumb a back end ratio of 36% or below is considered highly desirable, though lenders may allow higher levels for borrowers with strong profiles.
Debt-to-income Mortgage Loan Limits for 2018
Generally speaking, for most borrowers, the back-end ratio is typically more important than the front-end ratio. Here are DTI limits for popular mortgage loans. The soft limits may allow approval using automated underwriting software, whereas the hard limits may require manual approval and other compensating factors like a high credit score or perhaps even a co-signer.
| Loan Type | Front End | Back End | Hard Limit | Notes |
|---|---|---|---|---|
| Recommended | 28% | 36% | n/a | Ideal borrower, obtaining a great APR. |
| Conventional | most lenders look at back-end ratio | 36% to 43% | 45% to 50% | Each lender decided based on a variety of factors. |
| FHA | 31% | 43% | 56.99% | Requires compensating factors to get approved at a high ratio. |
| VA | most lenders look at back-end ratio | 41% | ~ 47% | Each lender decided based on a variety of factors for each veteran. Lenders have to explain why they approve any loan above a 41% limit. Basic housing & sustenance allowance count toward qualifying. |
| USDA | 29% | 41% | 41% | Loans geared toward serving low-income people in rural markets with incomes below 115% of the local median income. More details here |