Tools & Resources

Housing Ratio

A calculation your lender uses to determine if you can afford a particular monthly payment: The total monthly housing payment (PITI - Principal, Interest, Taxes, and Insurance) is divided by your gross monthly income, and shown as a percentage. For example: PITI = $1,500 divided by gross monthly income = $6000, Housing ratio = 25%. This example shows an ideal housing ratio, one well below typically acceptable ratios of 28%-33% for conventional loans and 29%-31% for FHA loans. Also known as a front-end, or qualifying ratio.

HUD (U.S. Dept of Housing and Urban Development)

A government agency responsible for creating and operating federal housing and community development programs. It also oversees the Federal Housing Administration.

HUD-1 Uniform Settlement Statement

See Closing Statement.

Impound Account

An account set up and operated by your mortgage lender that holds a portion of your monthly mortgage payments for payment of property taxes and insurance costs. Also known as Escrow Account.

Income

The sum of money from your sources of revenue, including salary, bonuses, interest and investment income. Income is an important piece of financial information that lenders review during the mortgage approval process.