What is the back-end ratio for a client with a monthly housing expense of $1,250, other consumer debt payments of $88, and a gross household income of $4,460?

To calculate the back-end ratio, you need to sum the client's monthly housing expenses and other debt payments, and then divide that total by their gross household income. The back-end ratio, also known as the debt-to-income ratio, gives a clearer picture of how much of a person's income is going towards debt repayment, which includes both housing costs and other debts.

In this scenario, the client's monthly housing expense is $1,250, and their other consumer debt payments total $88. Adding these amounts together gives:

$1,250 + $88 = $1,338.

Next, to find the back-end ratio, divide the total debt payments by the gross household income:

$1,338 / $4,460 = 0.3004, or approximately 30%.

This means that about 30% of the client's gross household income is allocated toward paying off debt, which falls in line with conventional guidelines on acceptable debt-to-income ratios. A back-end ratio of 30% indicates a manageable level of debt in relation to income and is typically viewed as a positive sign for lenders, as it suggests that the client is likely in a stable financial position while managing their debt obligations responsibly.