Loans & Mortgages
Payment limits
The two caps the lender applies to the housing payment.
The Formula
Front limit = income x front ratio; Back limit = income x back ratio - debts
The two caps the lender applies to the housing payment.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| I | Monthly income | currency | Gross monthly income. |
| f | Front ratio | percent | Housing-only limit, typically 28%. |
| b | Back ratio | percent | Total-debt limit, typically 36%. |
| D | Other debts | currency | Non-housing monthly payments. |
What Each Symbol Means
Icurrency
Monthly income
Gross monthly income.
fpercent
Front ratio
Housing-only limit, typically 28%.
bpercent
Back ratio
Total-debt limit, typically 36%.
Dcurrency
Other debts
Non-housing monthly payments.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate home loan eligibility page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Home Loan Eligibility, filed under Finance. Every number the guide produces comes from substituting into this one line.