FICO Score & Front End Ratio

When you apply for a mortgage the lender evaluates your financial situation from top to bottom. You have to pass the strict requirements of the mortgage underwriter to get financing for your new home. Two factors lenders look at are the FICO credit score and your front-end ratio.

  1. Front-End Ratio

    • Front-end ratio is the amount of money you'll spend each month on your housing expenses weighed against your gross income. That includes your base mortgage payment (principal and interest), property taxes, homeowner's insurance and private mortgage insurance (PMI) if applicable to the loan. Generally, a mortgage lender can extend you a loan if your front end ratio is 28 percent or less. For instance, if your estimated monthly housing expense is $1,000 and your monthly gross income is $4,800, your front-end ratio is 20.8 percent (1,000 divided by 4,800).

    FICO Score Requirements

    • Your FICO score is an accurate and trusted representation of how reliable you are as a consumer. The Fair Isaac Corp., the company that determines FICO scores, uses a complex algorithm based on your credit history to figure out the score. When it comes to getting a mortgage, the requirements for FICO scores vary depending on the lender's rules. Generally, a lender would prefer to see a minimum score of 580 for an Federal Housing Administration (FHA government-backed) loan. The minimum is usually higher for a standard (non-FHA) loan.

    Do They Relate?

    • While your front-end ratio doesn't necessarily have a direct relationship with your credit score, the amount of debt you have does. About 30 percent of your FICO score is calculated based on the amount you owe on debt accounts, including your mortgage debt. Also, note that simply opening a mortgage debt account can also affect your FICO score -- 10 percent of your score is calculated based on new debt accounts, while another 10 percent is based on the type of debt accounts you have.

    Improving FICO and Front-End Ratio

    • If you want to improve your chances of getting a mortgage you can take steps to improve your FICO score. Fix errors, stop making late payments and pay down some of your debt balances to attempt to boost your score. The only two ways to improve the front-end ratio is to either increase your income or look for less expensive houses, which reduces your estimated monthly mortgage payment.

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