DEFINITION of 'BackEnd Ratio'
A ratio that indicates what portion of a person's monthly income goes toward paying debts. Total monthly debt includes expenses such as mortgage payments (made up of PITI), creditcard payments, child support and other loan payments. Lenders use this ratio in conjunction with the frontend ratio to approve mortgages.
Also known as "debttoincome ratio".
INVESTOPEDIA EXPLAINS 'BackEnd Ratio'
For example, if your monthly income is $5,000 ($60,000/12) and your total monthly debt payments are $2,000, your backend ratio is 0.40 or 40%. Generally, lenders like to see a backend ratio that does not exceed 36%; however, there are lenders who make exceptions for ratios of up to 50% if you have good credit. Some lenders consider only this ratio when approving mortgages, as opposed to using it in conjunction with the frontend ratio.

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