8.3B Front and Back End Ratios Worksheet

Q1. Brittany and Jacob have an adjusted gross income of $109,890. Their monthly mortgage payment is $567.23. Their semi-annual property tax is $1,840, and their annual homeowner’s premium is $1275. They have a monthly credit card bill of $980 and a monthly car loan of $410. They also have an annual college tuition bill of $1200.

a. What is the front-end ratio?

• 12%

• 11%

• 10%

• 13%

Q1. Brittany and Jacob have an adjusted gross income of $109,890. Their monthly mortgage payment is $567.23. Their semi-annual property tax is $1,840, and their annual homeowner’s premium is $1275. They have a monthly credit card bill of $980 and a monthly car loan of $410. They also have an annual college tuition bill of $1200.

b. What is the back-end ratio?

• 26%

• 28%

• 27%

• 25%

Q2. Tom and Gwen have an adjusted gross income of $144,112. Their monthly mortgage payment for the house they want would be $1,483. Their annual property tax would be $9,330 and the homeowner’s insurance premium would cost them $1,099 per year. They have a monthly $444 car payment and their credit card monthly payment averages $4,021.

a. What is the front-end ratio?

• 17%

• 18%

• 19%

• 20%

Q2. Tom and Gwen have an adjusted gross income of $144,112. Their monthly mortgage payment for the house they want would be $1,483. Their annual property tax would be $9,330 and the homeowner’s insurance premium would cost them $1,099 per year. They have a monthly $444 car payment and their credit card monthly payment averages $4,021.

b. Based on the front-end ratio, would the bank lend them $220,000 to purchase the house they want?

• Yes

• No

Q2. Tom and Gwen have an adjusted gross income of $144,112. Their monthly mortgage payment for the house they want would be $1,483. Their annual property tax would be $9,330 and the homeowner’s insurance premium would cost them $1,099 per year. They have a monthly $444 car payment and their credit card monthly payment averages $4,021.

c. What is the back-end ratio?

• 56%

• 57%

• 58%

• 59%

Q2. Tom and Gwen have an adjusted gross income of $144,112. Their monthly mortgage payment for the house they want would be $1,483. Their annual property tax would be $9,330 and the homeowner’s insurance premium would cost them $1,099 per year. They have a monthly $444 car payment and their credit card monthly payment averages $4,021.

d. Based on the back – end ratio, would the bank lend them $220,000 to purchase the house they want?

• Yes

• No

Q3. Ted has an adjusted gross income of $120,006. He wants a house that has a monthly mortgage payment of $1,921 and annual property taxes of $7,112. His semiannual homeowner’s insurance would be $897. Ted has a credit card bill that averages $300 per month.

a. What is the front-end ratio?

• 24%

• 25%

• 26%

• 27%

Q3. Ted has an adjusted gross income of $120,006. He wants a house that has a monthly mortgage payment of $1,921 and annual property taxes of $7,112. His semiannual homeowner’s insurance would be $897. Ted has a credit card bill that averages $300 per month.

b. What is the back-end ratio?

• 30%

• 31%

• 32%

• 33%

Q3. Ted has an adjusted gross income of $120,006. He wants a house that has a monthly mortgage payment of $1,921 and annual property taxes of $7,112. His semiannual homeowner’s insurance would be $897. Ted has a credit card bill that averages $300 per month.

c. Assume that his credit rating is good. Based on the back-end ratio, would the bank offer him a loan?

• Yes

• No

Q3. Ted has an adjusted gross income of $120,006. He wants a house that has a monthly mortgage payment of $1,921 and annual property taxes of $7,112. His semiannual homeowner’s insurance would be $897. Ted has a credit card bill that averages $300 per month.

d. Based on the front-end ratio, would the bank offer him a loan?

• Yes

• No