Total housing expense is simply a quick method used by some lenders to assess a person’s overall financial situation-it is usually used to make an early "yes or no" decision on entering into a loan application process with a potential buyer. The total housing expense usually uses monthly figures, and sums up every cost associated with owning your home, including mortgage payments, insurance premiums, property taxes, and any homeowners or local fees.
Most borrowers also then add in monthly debt repayment amounts. This total housing expense is then compared to the individual’s gross income (sometimes called the "back end ratio") for the same period of time. Depending on the lender, if your ratio is less than 50% you’re going to get your loan; if it’s much over that, you’re walking out the door without the loan. Don’t be sad, though-if you walk out without the loan it means you couldn’t afford to pay it back anyway.