Housing ratio
Certified Financial Planner glossary · Certified Financial Planner
Definition
A cash-flow benchmark comparing housing costs to gross income, used with total debt ratios in underwriting and planning.
Housing ratio in plain English
Underwriting worksheets divide housing costs by take-home pay and the ratio looks too high compared with published benchmarks. Housing ratio compares housing costs to gross income, and planners use it alongside total debt ratios in underwriting and planning conversations. Using net income as the base is correct math on the wrong question. Confirm the stem's income definition first, then judge whether housing costs alone are straining the monthly budget.
Practice Housing ratio
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