Qualifying Ratios

Qualifying Ratios
A set of ratios that are used by lenders to approve borrowers for a mortgage. The borrower's front-end ratio, which is the total housing expense compared to the borrower's gross monthly income, is compared to the borrower's back-end ratio, which comprises of the total housing expense and other consumer debt compared to the borrower's gross monthly income. The front-end ratio is generally limited to a maximum of 28% and the back-end ratio is generally limited to 35%. However, both ratios change with market conditions and may be influenced by other risk factors (such as the loan-to-value ratio of the mortgage).

Qualifying ratios can vary from lender to lender, from loan program to loan program or from changing market conditions. If one or both of the qualifying ratios exceed the maximum, loan underwriters might look for "compensating factors" such as a high FICO score and/or a low loan-to-value ratio to offset the risk of high qualifying ratios in order to approve and underwrite a mortgage.


Investment dictionary. . 2012.

Игры ⚽ Нужен реферат?

Look at other dictionaries:

  • qualifying ratios — USA Data used to decide whether a potential borrower qualifies for a mortgage. Lenders compare a borrower s monthly income to the proposed monthly mortgage expenses to decide whether the borrower is creditworthy. A front or top ratio reflects the …   Law dictionary

  • Qualification Ratio — Ratio of debt to income and housing expense to income that is used by mortgage lenders to determine a borrower s credit worthiness for certain loan amounts. Generally, a borrower s debt to income ratio, which includes housing expenses plus long… …   Investment dictionary

  • Maximum Loan Amount — Describes the maximum amount that a borrower can borrow. The maximum loan amount is based on a combination of different factors involving the specific loan program, the value of the property that secures the loan and the borrower s qualifying… …   Investment dictionary

  • Net capital rule — The uniform net capital rule is a rule created by the U.S. Securities and Exchange Commission ( SEC ) in 1975 to regulate directly the ability of broker dealers to meet their financial obligations to customers and other creditors.[1] Broker… …   Wikipedia

  • NASCAR rules and regulations — The National Association for Stock Car Auto Racing (NASCAR) makes and enforces numerous rules and regulations that transcend all racing series. NASCAR issues a different rule book for each racing series; however, rule books are published… …   Wikipedia

  • Dominion Bond Rating Service — DBRS is a credit rating agency headquartered in Toronto, Ontario. Founded in 1976 by its current owner and president, Walter Schroeder, it is the largest rating agency in Canada. It is one of ten Nationally Recognized Statistical Rating… …   Wikipedia

  • education — /ej oo kay sheuhn/, n. 1. the act or process of imparting or acquiring general knowledge, developing the powers of reasoning and judgment, and generally of preparing oneself or others intellectually for mature life. 2. the act or process of… …   Universalium

  • Ford Racing (video game) — Infobox VG title = Ford Racing developer = Empire Interactive/ 2K Games publisher = Take Two Interactive released = March 6, 2001 genre = Racing modes = Single player ratings = vgratings|ESRB=Everyone platforms =PlayStation, PC, Macintosh Ford… …   Wikipedia

  • ECONOMIC AFFAIRS — THE PRE MANDATE (LATE OTTOMAN) PERIOD Geography and Borders In September 1923 a new political entity was formally recognized by the international community. Palestine, or Ereẓ Israel as Jews have continued to refer to it for 2,000 years,… …   Encyclopedia of Judaism

  • PITI — In relation to a mortgage, PITI (pronounced like the word pity ) is an acronym for a mortgage payment that is the sum of monthly principal, interest, taxes, and insurance. That is, PITI is the sum of the monthly loan service (principal and… …   Wikipedia

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”