I’ve been speaking in general terms. Let’s get specific. Here is what HUD Handbook 4155.1 says about the two types of debt ratios:
- Front end: “The relationship of the mortgage payment to income [known as the front-end debt-to-income ratio] is considered acceptable if the total mortgage payment does not exceed 31% of the gross effective income.”
- Back end: “The relationship of total obligations to income [known as the back-end debt-to-income ratio] is considered acceptable if the total mortgage payment and all recurring monthly obligations do not exceed 43% of the gross effective income.”
Source: HUD Handbook 4155.1, Chapter 4, Section F, “Borrower Qualifying Ratios”
Read more: http://www.homebuyinginstitute.com/news/fha-with-high-debt-level-431/#ixzz2Zyd7p4wS
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