Front-End Ratio

Debt-to-Income Ratio

A financial metric that compares your total monthly debt payments to your gross monthly income, expressed as a percentage. Lenders use this ratio to assess your ability to take on additional debt, and most mortgage lenders prefer a ratio below 43%. A lower debt-to-income ratio indicates you have a healthy balance between debt and income.

Mortgage

A loan used to purchase real estate where the property serves as collateral. The borrower makes regular payments over a set term (typically 15-30 years) until the loan is paid off.

Budget

A financial plan that outlines expected income and expenses over a specific period. Creating and following a budget is essential for managing money and achieving financial goals.