Enter the sum of all of the borrower’s monthly debt payments and their monthly income to determine the back-end ratio.
Back-End Ratio Formula
The following formula is used to calculate the back-end ratio of a borrower.
BER = D / I *100
- Where BER is the Back-End Ratio (%)
- D is the monthly debt payments
- I is the total monthly income
Back-End Ratio Definition
A back-end ratio is defined as the ratio of the total monthly debt payments to the total monthly income of an individual or borrower.
Back-End Ratio Example
How to calculate a back-end ratio?
- First, determine the monthly debt payment.
Sum together all of the monthly debt payments made by the borrower.
- Next, determine the monthly income.
Calculate the total monthly income brought home by the borrower.
- Finally, calculate the back-end ratio.
Calculate the back-end ratio using the equation above.
A back-end ratio is a measure of the ratio of total monthly debt payments to total gross monthly income of an individual borrower.