Total Housing Expense

AAA

DEFINITION of 'Total Housing Expense'

The sum of a homeowner's monthly mortgage principal and interest payments, hazard insurance premiums, property taxes and homeowner's association fees, plus monthly debt service. Monthly debt service consists of payments on credit cards, installment loans and other debts. A borrower's total housing expense is used in the calculation of a back-end ratio, which is used to qualify a borrower for a loan.

INVESTOPEDIA EXPLAINS 'Total Housing Expense'

A borrower's total housing expense as a percentage of his or her total gross monthly income (the back-end ratio) generally cannot exceed 56%; however, that limit can vary slightly based on the lender, loan program and market conditions. For a borrower whose back-end ratio exceeds the limit, compensating factors such as a good credit history, a low loan-to-value ratio, and substantial net worth might be considered by underwriters in granting approval for a mortgage.

RELATED TERMS
  1. House Poor

    A situation that describes a person who spends a large proportion ...
  2. Loan-To-Value Ratio - LTV Ratio

    A lending risk assessment ratio that financial institutions and ...
  3. Front-End Ratio

    A ratio that indicates what portion of an individual's income ...
  4. Back-End Ratio

    A ratio that indicates what portion of a person's monthly income ...
  5. Principal, Interest, Taxes, Insurance ...

    The components of a mortgage payment. Principal is the money ...
  6. Combined Loan To Value Ratio - ...

    A ratio used by lenders to determine the risk of default by prospective ...
Related Articles
  1. Credit & Loans

    4 Steps To Attaining A Mortgage

    It starts with knowing your choices as well as your price range. We show you how to get there.
  2. Economics

    How Interest Rates Affect The Housing Market

    Understand how rate changes can affect home prices, and learn how you can keep up.
  3. Personal Finance

    Understanding Your Mortgage

    We walk through the steps needed to secure the best loan to finance the purchase of your home.
  4. Budgeting

    Mortgages: How Much Can You Afford?

    Answering this means number-crunching as well as factoring in other considerations and expenses.
  5. Budgeting

    How Do Your Finances Stack Up?

    We look at the average consumer numbers, so you can get some perspective on how you spend your hard-earned dollars.
  6. Retirement

    Too Much Debt For A Mortgage?

    Just because a lender is willing to offer you a loan doesn't mean you should take it.
  7. In today's credit-oriented world, kids should learn to use credit before they go to college. Here are some good cards to get them started.
    Credit & Loans

    The Very Best Credit Cards For Your Teen

    In today's credit-oriented world, kids should learn to use credit before they go to college. Here are some good cards to get them started.
  8. It can be great to live in the moment, but the actions and decisions you make now can greatly impact your sense of financial security down the road.
    Personal Finance

    How Do Americans Keep Minimizing Their Net Worth?

    It can be great to live in the moment, but the actions and decisions you make now can greatly impact your sense of financial security down the road.
  9. It's tough to get a credit card when you move to the U.S. with no Social Security number and no American credit history. Here's how to get started.
    Credit & Loans

    Top Credit Card Options For International Students

    It's tough to get a credit card when you move to the U.S. with no Social Security number and no American credit history. Here's how to get started.
  10. Personal Finance

    What Canadian credit cards offer the best travel rewards?

    Discover Canada's best credit cards for travel rewards and the benefits that they offer. Learn how these cards can help you travel safely and happily..

You May Also Like

Hot Definitions
  1. Scarcity

    The basic economic problem that arises because people have unlimited wants but resources are limited. Because of scarcity, ...
  2. Trust Fund

    A trust fund is a fund comprised of a variety of assets intended to provide benefits to an individual or organization. The ...
  3. Christmas Tree

    An options trading strategy that is generally achieved by purchasing one call option and selling two other call options at ...
  4. Christmas Club

    A short-term savings account that usually pays out the full account balance to its account holders once each year, right ...
  5. Boston Snow Indicator

    A market theory that states that a white Christmas in Boston will result in rising stock prices for the following year. For ...
  6. Christmas Island Dollar

    The former currency of Christmas Island, an Australian island in the Indian Ocean that was discovered on December 25, 1643. ...
Trading Center