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FHA front and back end ratios

Established Member

FHA front and back end ratios

I'm not completely sure I understand the terminology,  so I was hoping to get some help/verification regarding FHA's requirement of "gross monthly salary must be greater than 31% of the sum of the monthly mortgage plus monthly taxes" , and  "gross monthly salary must be greater than 43% of the sum of the monthly mortgage plus monthly taxes and monthly debt payments".  I earn $2,700 gross monthly. The home I'm wanting to purchase is $85,000. With 3.5% down, my actual loan would be about $82,000. I'm planning on going thru FHA for a 15 yr. fixed at say 3.5 interest (hopefuly the rates will be in that ballpark come Feb.). My only other monthly payments will be $288 for auto and $45 on credit card. Based on these figures, I "think" I'm OK, but wanted someone who's much sharper than me at this stuff to verify. My credit score is 685. THANKS

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Contributor

Re: FHA front and back end ratios

My understanding of this using your front/back end ratios below is that your mortgage payment would have to be $837 or less including PITI plus HOAs if applicable (front end).  Also all of your monthly debt including your mortage payment/housing cost would need to be under $1161 per month (back end).  That being said if you make it through automated underwriting and have a mid score of at least 640 you may have much greater flexibility on the back end ratio, depending on the lender.  My MO has also said in casual conversation that he's seen applicants get approved with a 48% back end ratio. 

 

I don't think anyone can answer your question for sure about your numbers specifically without the estimated mortgage payment including tax, insurance, and HOA fees.

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Message 2 of 4
Established Member

Re: FHA front and back end ratios

Thanks for your response. The "front end" figure of $837 is what I came up with also.  Regarding other issues, there is no HOA involved and annual taxes are estimated to be $1,260 (or $105 monthly). 

Message 3 of 4
Valued Contributor

Re: FHA front and back end ratios

The numbers on your GFE should be very close to the actual payment....easy to remember front end= just the total mortgage back end= house + "debts"

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