Dictionary of Real Estate Terms: back-end ratio
back-end ratio
one of several criteria used to qualify homebuyers or owners for mortgage loans. The back-end ratio takes into account existing long-term debt of the loan applicant. Contrast with front-end ratio.
Example: Many lenders apply a back-end ratio of 36% when originating conventional loans. This means an applicant's total monthly debt payments, including existing debt and the loan applied for, must be no more than 36% of the applicant's gross monthly income.
