Origination ActivitiesQuestion 241 of 400
In qualifying a borrower, the front-end (housing) ratio is calculated as:
a.Total monthly debts divided by gross monthly income
b.Loan amount divided by property value
c.Monthly housing expense (PITI) divided by gross monthly income
d.Net monthly income divided by total assets
Explanation
The front-end or housing ratio compares the total monthly housing expense (principal, interest, taxes, and insurance, or PITI) to gross monthly income. The back-end ratio adds all other monthly debts. Loan-to-value is a separate measure of the loan against property value.
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