28/36 Rule
Quick Answer
A lending guideline: housing costs ≤ 28% of income, total debt ≤ 36%.
Definition
A lending guideline: housing costs ≤ 28% of income, total debt ≤ 36%.
Explanation
The 28/36 rule is a standard underwriting guideline. The 28% front-end ratio means housing payment (PITI) shouldn't exceed 28% of gross income. The 36% back-end ratio means all debt including mortgage shouldn't exceed 36%.
While not a hard requirement, exceeding these thresholds makes qualifying harder and may result in higher rates.
Example
$7,000 income: max housing at 28% = $1,960/month. Max total debt at 36% = $2,520/month.
Frequently Asked Questions
What is 28/36 Rule?
A lending guideline: housing costs ≤ 28% of income, total debt ≤ 36%.
How does 28/36 Rule work?
The 28/36 rule is a standard underwriting guideline. The 28% front-end ratio means housing payment (PITI) shouldn't exceed 28% of gross income. The 36% back-end ratio means all debt including mortgage shouldn't exceed 36%.While not a hard requirement, exceeding these thresholds makes qualifying harder and may result in higher rates.
Can you give an example of 28/36 Rule?
$7,000 income: max housing at 28% = $1,960/month. Max total debt at 36% = $2,520/month.
Free Excel Templates
Also try our free Home Affordability Calculator template
Calculate the maximum home price you can afford. Analyze mortgage payments, DTI ratios, and down payment impact on affordability.
Download Home Affordability Calculator