HUD Housing Counseling Exam 2023/2024

HUD Housing Counseling Exam 2023/2024 Back-end ratio The back-end ratio (or debt-to-income ratio) compares total debt to gross monthly income. The client's only debt is a $435 lease payment, so the $950 mortgage payment brings his total monthly debt to $1,385. He earns $50,000 per year, which equals $4,166.67 per month. The client's total current expenses divided by gross monthly income equals 52%. The client's combined current housing payment and car payment divided by gross monthly income equals 24%. Calculation: Debt: $435 + 950 = $1,385 Income: $50,000 / 12 = $4,166.67 Back-end ratio: $1,385 / $4,166.67 = 0.33 or 33% Reference: Module 2.1 Renting vs. Buying Page Number 22 to 24 Max Front-End Ratio/Back-End Ratio for Conventional Loan The maximum front-end ratio for a standard conventional loan is 28%, and the back-end ratio is 36%. The front-end ratio is calculated as 28% of the client's monthly income of $4,167, which is $1,167. The back-end ratio is calculated as 36% of the client's monthly