For example, if your annual income is $60,000, your monthly income is $5,000(60,000/12). By asking your lender what front-end ratio would be required in order for your mortgage to be approved, you can figure how much of that $5,000 you can allocate to your mortgage payments. If the required front-end ratio is 31%, you can allocate $1,550 (5,000 x 0.31). Thus, if your PITI is $1,550 or less, you would be approved.
Typical monthly housing expenses include the mortgage principal, interest, taxes and insurance payments - collectively known as PITI.
Investment dictionary. Academic. 2012.
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