Front-end ratio
The housing expense, or front-end ratio, shows how much of your gross (pretax) monthly income would go toward the mortgage payment. As a general guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28 percent of your gross monthly income. To calculate your housing expense, multiply your annual salary by 0.28, then divide by 12 (months). The answer is your maximum housing expense.

Annual salary x 0.28		= Monthly housing expense
12 months

Back-end ratio
The total debt-to-income, or back-end ratio, shows how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans, and condominium fees. In general, your total monthly debt obligation should not exceed 36 percent of your gross income. To calculate your debt-to-income ratio, multiply your annual salary by 0.36, then divide by 12 (months). The answer is your maximum allowable debt-to-income ratio.

Annual salary x 0.36		= Monthly allowable debt-to-income ratio
12 months

$20,000

$467

$600

$30,000

$700

$900

$40,000

$933

$1,200

$50,000

$1,167

$1,500

$60,000

$1,400

$1,800

$80,000

$1,867

$2,400

$100,000

$2,333

$3,000

$150,000

$3,500

$4,500

Conventional loans:
Housing costs: 26 percent to 28 percent of monthly gross income.
Housing plus debt costs: 33 percent to 36 percent of monthly gross income.

FHA loans:
Housing costs: 29 percent of monthly gross income.
Housing plus debt costs: 41 percent of monthly gross income.