1. What is Mortgage BSFC?

The Mortgage BSFC (Back-End Service-to-Finance Cost) ratio is a financial metric that compares the total loan amount to the borrower's annual income. Despite its name, it's not an official mortgage term but serves as a simple debt-to-income indicator.

2. How Does the Calculator Work?

The calculator uses the BSFC formula:

Where:

• \( Loan\ Amount \) — Total mortgage loan amount in USD
• \( Annual\ Income \) — Borrower's gross annual income in USD

Explanation: The ratio shows how many years of income would be needed to pay off the loan, assuming no interest or other expenses.

3. Importance of BSFC Calculation

Details: While not a standard mortgage metric, this ratio can help borrowers understand the relative size of their mortgage compared to their income. Lower ratios indicate more manageable debt levels.

4. Using the Calculator

Tips: Enter the total loan amount in USD and your gross annual income in USD. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Is BSFC an official mortgage term?
A: No, it's a misnomer used here to describe a simple loan-to-income ratio calculation.

Q2: What is a good BSFC ratio?
A: There's no standard benchmark, but generally lower ratios (under 3-5) suggest more manageable debt relative to income.

Q3: How does this differ from DTI ratio?
A: Debt-to-Income (DTI) compares monthly payments to monthly income, while BSFC compares total loan amount to annual income.

Q4: Should I include other debts in the loan amount?
A: For a pure mortgage BSFC, use just the mortgage amount. For total debt analysis, you could include other loans.

Q5: Does this account for interest?
A: No, this is a simple ratio that doesn't factor in interest rates, payment terms, or other loan costs.