Front-End Ratio
The ratio of proposed housing costs to gross monthly income, used by lenders to assess affordability.
What is Front-End Ratio?
The front-end ratio, also known as the housing ratio or PITI ratio, measures a borrower's proposed monthly housing costs—including principal, interest, property taxes, and homeowners insurance (PITI)—as a percentage of gross monthly income. Mortgage lenders use the front-end ratio alongside the back-end (total DTI) ratio during underwriting. Most conventional lenders prefer a front-end ratio no higher than 28%, while FHA guidelines allow up to 31%. A lower front-end ratio indicates that a smaller share of income is committed to housing, providing more financial cushion. The front-end ratio focuses exclusively on housing costs, while the back-end ratio captures all recurring monthly debt obligations including housing.
Example
A borrower earning $7,000 per month gross proposes a mortgage with a $1,540 monthly PITI payment ($1,200 principal and interest + $200 property taxes + $140 insurance). The front-end ratio is $1,540 ÷ $7,000 = 22%, comfortably below the conventional 28% guideline.