Housing
Glossary
Every term used in this calculator, defined plainly.
- Front-End Ratio
- Monthly housing costs (mortgage principal+interest, property tax, insurance, HOA) divided by gross monthly income. Lenders typically want this below 28%.→ Used internally to calculate the "Conservative" home price estimate
- Back-End Ratio (DTI)
- All monthly debt payments (housing + car loans + student loans + credit cards + other) divided by gross monthly income. Lenders typically want this below 36-43%.→ Used internally to calculate the "Lender maximum" home price estimate
- PMI (Private Mortgage Insurance)
- Required insurance when your down payment is less than 20%. Typically 0.5-1.5% of the loan amount annually, added to your monthly payment. Removed once you reach 20% equity.
- 28/36 Rule
- A lending guideline: housing costs should not exceed 28% of gross income (front-end), and total debts should not exceed 36% (back-end). Many lenders now allow up to 43% back-end.
- Principal & Interest (P&I)
- The portion of your mortgage payment that goes to loan repayment. Doesn't include taxes, insurance, or HOA — those are separate monthly costs often bundled into an escrow payment.→ Calculated from home price, down payment, rate, and term
- Debt-to-Income Ratio
- Your total monthly debt obligations divided by gross monthly income. The primary metric lenders use to evaluate loan applications.
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