Which item is NOT included in the computation of the Housing Ratio?

The Housing Ratio, often referred to as the Front-End Ratio, is a calculation used by lenders to determine how much of a borrower's gross monthly income will go toward housing-related costs. This ratio typically includes items that are directly related to homeownership.

When assessing the Housing Ratio, the components considered include principal and interest payments on the mortgage, property taxes, and homeowners association dues. These are all essential expenditures tied to owning a home, and they give lenders a clear picture of a borrower's housing costs in relation to their income.

In contrast, credit card payments are not included in the Housing Ratio calculation. They are considered part of the borrower's overall debt obligations, which factors into the Total Debt Ratio (or Back-End Ratio), rather than the Housing Ratio itself. This distinction is crucial for lenders assessing the borrower's ability to manage housing-related expenses specifically, without being influenced by other monthly debt obligations that do not pertain directly to the home.