Can you explain the PITI/debt ratio?


The PITI/debt ratio can be front-debt and back-debt. PITI stands for Principal, Interest, Taxes & Insurance - the four components of a mortgage monthly payment.

Front-debt PITI ratio is the ratio between the expected PITI payment and your gross monthly income. This is the ratio lenders will use to qualify you for the loan. Also called top ratio.

Back-debt PITI ratio is the ratio between your PITI payment plus any other monthly debt obligations (excluding utilities) and your monthly gross income. Also called back-end or total expense ratio.

There is a correlation between the mortgage LTV and the PITI debt ratio. The higher the LTV, the lower the front and back debt ratios allowed. Lenders will have different requirements for the debt ratio - from as low as 28% front-end to 65% back-end. However, loan terms will also vary and loans with particularly high PITI/debt ratios will be more expensive.

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