back-end ratio definition

back-end ratio

One of the ratios used by lenders in judging an applicant's capacity to pay back a home mortgage loan. Lower this ratio is, the better qualified the applicant is for the loan. Also called back ratio. See also front end ratio. Formula: (All other loan installments + Installment on the applied-for loan + Monthly-portion of estimated property taxes + Monthly-portion of home-insurance premium) ÷ Gross monthly income.

back-end ratio is in the Banking, Commerce & Finance and Real Estate & Buildings subjects.

back-end ratio appears in the definitions of the following terms: front end ratio, back ratio, qualifying ratios and principal, interest, taxes, and insurance (PITI)

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