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I don't know how to implement the "balance" either but I do think there are flaws that fall outside of the "Johnny" example. One flaw is that over the lifespan of the loan (some over 20 years) the interest rate can be raised as well as the percentage of income that can be collected. This isn't right. Plus, I don't think it's right that income is determined on a household basis. My wife and I are literally considering getting a "divorce" on paper because it will save us roughly $12,000 a year. -if you consider that the $12k could be used to procure an appreciable investment, the divorce becomes a pragmatic option. -This shouldn't be the case.