Printable cheat sheet

Texas mortgage qualifying ratios cheat sheet

Built for Texas sales agent exam prep. Separate housing payment from total monthly debt before using front-end or back-end ratios.

Loan amountPrice - down payment

Calculate loan amount before estimating principal and interest.

PITIP&I + taxes + insurance

If the exam gives P&I, use it first, then add taxes, insurance, and HOA only when included as housing expense.

Front-endHousing / gross income

Housing only. Do not include car payments or credit cards here.

Back-end(Housing + debts) / gross income

This is where other recurring monthly debt belongs.

Ratio limitsUse the stem

Treat 28/36 as a practice default only. Actual lender and loan-product limits vary.

Required incomePayment / ratio

Work backward when the question asks how much income is needed.

The exam setup rule

Name whether the question asks for front-end, back-end, max payment, or required income.
If principal and interest is given, use that number before building PITI.
Convert annual taxes and insurance into monthly amounts when needed.
Build the monthly housing payment before calculating either ratio.
Keep other monthly debt out of the front-end ratio.
Use the qualifying limits in the stem, then check both ratios if both limits are given.

Front-end ratio$2,500 housing payment, $8,500 gross monthly income

$2,500 / $8,500 = 0.2941 = 29.41%.

Back-end ratio$2,500 housing, $700 other debt, $8,500 income

($2,500 + $700) / $8,500 = 37.65%.

Max housing$8,500 income, 28% front-end ratio

$8,500 x 0.28 = $2,380 maximum housing payment.

Required income$2,520 housing payment at 28%

$2,520 / 0.28 = $9,000 required gross monthly income.

Debt trap$2,380 max housing by front-end, but $900 other debt

At 36% back-end with $8,500 income, total debt allowed is $3,060. Subtract $900 debt, so housing is capped at $2,160.

Do not use principal and interest only when the question asks for housing payment.
Do not recalculate principal and interest if the exam stem already gives it.
Do not include other monthly debt in the front-end ratio.
Do not leave annual taxes annual. Convert them to monthly before adding to PITI.
Do not use net income when the ratio calls for gross monthly income.
Do not multiply by 28 for a 28% ratio. Use 0.28.
Do not treat practice ratio limits as lender approval standards.

Back-end ratio should be higher than front-end ratio when other monthly debt exists.
Higher gross monthly income should lower both ratios for the same payment.
Higher debts should raise the back-end ratio but should not change the front-end ratio.
Maximum housing by ratios should be the lower qualifying number when both ratios are tested.
A required-income answer should rise when payment rises.