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DEBT RATIO

Deb t Ratios are the relationship between ones income and one expenses. Ratios are generally express as two numbers like 31 over 43 or 31/43. The first number, the 31, represents the relationship between the borrowers income and his new housing expense of principle , interest, taxes, insurance and homeowners dues. A borrower who makes $3,000 per month and has a housing expense of $930 would have a 31% top end ratio.

The other number of 43% represents the total monthly debt, including all other debt such as credit cards, loans, child support, etc. Thus in our example of the borrower that makes $3,000 per month and had a total expense of $1,290, would have a 41% bottom ratio.