Quick answer
The housing ratio, or front-end ratio, is your monthly housing payment (principal, interest, property taxes, homeowners insurance, mortgage insurance and any HOA dues) divided by your gross monthly income. FHA uses 31% as its guideline on manually underwritten loans, and Freddie Mac suggests keeping housing costs below 30%.
Key facts
Example: income for a median-priced home
On a $360,000 home with 10% down at 7.24%, with property tax at the national effective rate of 0.89% and average insurance, the full payment comes to about $2,784 a month: $2,208 principal and interest, $267 tax, $147 insurance and $162 mortgage insurance. Keeping that under 30% of income takes about $9,280 a month, or $111,000 a year.
Which loans test it
FHA manual underwriting (31%) and USDA (29%) set housing ratio limits. Fannie Mae and Freddie Mac’s rules cap only the total debt-to-income ratio, so on a conventional loan the housing payment matters through that total. Even where no lender limit applies, the front-end ratio is a quick budget check: the more of your income the payment takes, the less room for reserves and everything else. Run your own numbers in the affordability calculator.
Related terms
- PITI and escrow account
Sources
- US Census Bureau, American Community Survey 2024 1-year — Median value of owner-occupied homes (2024 ACS 1-year)
- Freddie Mac Primary Mortgage Market Survey — 30-year fixed rate, national weekly average (Week of Oct 29, 2026)
- US Census Bureau, American Community Survey 2024 1-year — Effective property tax rate (median taxes ÷ median home value) (2024 ACS 1-year)
- Freddie Mac Research — Average homeowners insurance premium per $1,000 of home value (2023 data)
- Freddie Mac My Home — Typical PMI cost, low end; Typical PMI cost, high end (Oct 28, 2026)
- Freddie Mac My Home — Freddie Mac guidance: housing costs below this share of gross income (Jan 22, 2026)
- HUD Mortgagee Letter 2026-11 — FHA manual underwriting housing ratio (no compensating factors) (Oct 8, 2026)
- USDA Rural Development, HB-1-3555 Chapter 11 — USDA guaranteed loan: housing payment ratio (share of repayment income) (Nov 25, 2025)
- Fannie Mae Selling Guide B3-6-02: Debt-to-Income Ratios
Last reviewed Figures are checked against the sources above. Read our editorial policy. This page is general information, not financial advice — see the disclaimer.