What is Front-End Ratio in Retail? Explained

The front-end ratio in retail finance is a financial metric that evaluates an individual's capacity to manage housing-related expenses. Calculated by dividing total housing costs (including mortgage payments, property taxes, and insurance) by gross income, it expresses the percentage of income allocated to cover these expenses. Lenders commonly use the front-end ratio, along with the debt-to-income ratio, to assess applicants' financial suitability for home loans, ensuring they can effectively manage the costs associated with homeownership.