Which percentage figure is associated with the front ratio in the material?

Which percentage figure is associated with the front ratio in the material?

• A. 28%
• B. 36%
• C. 40%
• D. 32%

Answer: (A)

The front-end ratio measures housing costs as a share of gross monthly income, guiding how much of income goes toward housing (PITI) each month. The figure associated with this guideline is 28 percent, because lenders traditionally cap housing payments at about 28% of gross income when evaluating affordability. For example, with a $5,000 monthly gross income, the housing payment should be around $1,400 or less under this standard. The other percentages are higher limits often linked to total debts or more aggressive underwriting, not the typical front-end housing-cap.

The front-end ratio measures housing costs as a share of gross monthly income, guiding how much of income goes toward housing (PITI) each month. The figure associated with this guideline is 28 percent, because lenders traditionally cap housing payments at about 28% of gross income when evaluating affordability. For example, with a $5,000 monthly gross income, the housing payment should be around $1,400 or less under this standard. The other percentages are higher limits often linked to total debts or more aggressive underwriting, not the typical front-end housing-cap.