What components are included in the front-end ratio?
The front-end ratio is explained in detail in the Guidelines. Generally, the front-end ratio is the ratio of PITIA to monthly gross income. PITIA includes principal, interest, property taxes, all property-related insurance (hazard, flood, earthquake, etc) and required homeowners association payments. Monthly gross income is the borrowers income before any payroll deductions, including base pay, commissions, fees, tips, bonuses, housing allowances and other compensation. Income for wage earners will have to be verified by a signed Form 4506 T (Request for Transcript of Tax Return), the most recent tax return and two recent pay stubs. For self-employed borrowers or non-wage income, the borrowers income must be verified by third party documents providing reasonably reliable evidence. Borrowers must also attest that they do not have sufficient liquid assets to make monthly mortgage payments.
The front-end ratio is explained in detail in the Guidelines. Generally, the front-end ratio is the ratio of PITIA to monthly gross income. PITIA includes principal, interest, property taxes, all property-related insurance (hazard, flood, earthquake, etc) and required homeowners association payments. Monthly gross income is the borrower’s income before any payroll deductions, including base pay, commissions, fees, tips, bonuses, housing allowances and other compensation. Income for wage earners will have to be verified by a signed Form 4506 T (Request for Transcript of Tax Return), the most recent tax return and two recent pay stubs. For self-employed borrowers or non-wage income, the borrower’s income must be verified by third party documents providing reasonably reliable evidence. Borrowers must also attest that they do not have sufficient liquid assets to make monthly mortgage payments. 18.
