The Mortgage to Income (PTI) ratio, often referred to as the front-end ratio, is a key metric used by lenders to assess your ability to afford a mortgage. It compares your potential monthly housing costs (Principal, Taxes, and Insurance – PITI) to your gross monthly income. A lower ratio generally indicates a lower risk for lenders and suggests you can comfortably afford the mortgage payments.
How is it calculated?
The formula is straightforward:
Mortgage to Income Ratio (%) = (Estimated Monthly Mortgage Payment / Gross Monthly Income) * 100
In this calculator, the "Estimated Monthly Mortgage Payment" should include your anticipated principal and interest, property taxes, homeowner's insurance, and potentially any Homeowner's Association (HOA) dues. Your "Gross Monthly Income" is your income before taxes and other deductions.
Why is it important?
Lender Approval: Most lenders have specific PTI ratio limits they will approve. Exceeding these limits can lead to loan denial.
Financial Health: A high PTI ratio means a significant portion of your income goes towards housing, potentially leaving you with less disposable income for other expenses, savings, or emergencies.
Affordability: It helps you gauge how much house you can realistically afford without overextending your finances.
General Guidelines:
While specific thresholds vary by lender and loan type, common recommendations are:
Ideal: Below 28% (many consider this a very healthy ratio).
Acceptable: Up to 36% (often the maximum for conventional loans without other compensating factors).
High Risk: Above 36% may indicate financial strain and could require additional documentation or lead to denial.
Note: This ratio is often used alongside the Debt-to-Income (DTI) ratio, which includes all your monthly debt obligations. Lenders consider both ratios to get a complete picture of your financial situation.
function calculateMortgageToIncomeRatio() {
var monthlyMortgagePaymentInput = document.getElementById("monthlyMortgagePayment");
var monthlyGrossIncomeInput = document.getElementById("monthlyGrossIncome");
var ratioResultElement = document.getElementById("ratioResult");
var guidelineResultElement = document.getElementById("guidelineResult");
var errorMessageElement = document.getElementById("errorMessage");
var monthlyMortgagePayment = parseFloat(monthlyMortgagePaymentInput.value);
var monthlyGrossIncome = parseFloat(monthlyGrossIncomeInput.value);
// Clear previous error messages
errorMessageElement.textContent = "";
// Input validation
if (isNaN(monthlyMortgagePayment) || monthlyMortgagePayment < 0) {
errorMessageElement.textContent = "Please enter a valid monthly mortgage payment.";
ratioResultElement.textContent = "–";
guidelineResultElement.textContent = "";
return;
}
if (isNaN(monthlyGrossIncome) || monthlyGrossIncome <= 0) {
errorMessageElement.textContent = "Please enter a valid gross monthly income (must be greater than zero).";
ratioResultElement.textContent = "–";
guidelineResultElement.textContent = "";
return;
}
var mortgageToIncomeRatio = (monthlyMortgagePayment / monthlyGrossIncome) * 100;
ratioResultElement.textContent = mortgageToIncomeRatio.toFixed(2) + "%";
var guidelineMessage = "";
if (mortgageToIncomeRatio = 28 && mortgageToIncomeRatio <= 36) {
guidelineMessage = "This ratio is within acceptable limits for many lenders.";
guidelineResultElement.style.color = "var(–primary-blue)";
} else {
guidelineMessage = "This ratio is high. You may face challenges with loan approval or financial strain. Consider increasing income or reducing housing costs.";
guidelineResultElement.style.color = "#dc3545"; // Red for high ratio
}
guidelineResultElement.textContent = guidelineMessage;
}