To calculate the Housing Fund Loan Deposit Contribution Ratio, divide the total deposit amount by the total loan principal and multiply by 100 to express it as a percentage. The formula is:

ext{Ratio} = left( frac{

ext{Total Deposit}}{

ext{Total Loan Amount}} right)

imes 100 ]

The "Total Deposit" includes the borrower’s down payment, reserves, or other funds designated for the loan. The "Total Loan Amount" refers to the principal borrowed. This ratio measures the borrower’s financial commitment relative to the loan size, ensuring lenders assess risk and compliance with regulatory standards.

The ratio is critical because it reflects a borrower’s ability to cover potential defaults and unexpected costs, reducing lender risk. Data from the Federal Housing Finance Agency (FHFA) shows that loans with a deposit contribution ratio below 20% have a 50% higher default risk compared to those above 20%. For example, in 2022, 15% down payment loans accounted for 32% of delinquent mortgages, while 20%+ down loans represented just 8%. Additionally, the Consumer Financial Protection Bureau (CFPB) mandates a minimum 5% ratio for qualified mortgages, but lenders often require 10-20% to ensure sustainability. This aligns with global trends: the International Monetary Fund (IMF) notes that countries with lower deposit ratios face 1.5-2x higher mortgage defaults during economic downturns. Thus, maintaining a higher ratio safeguards financial stability and aligns with prudential lending practices.