The 28/36 Rule Explained: A Quick Affordability Gut-Check
The 28/36 rule is a widely referenced guideline for gauging mortgage affordability before formally applying for a loan. It's a rule of thumb, not a regulatory requirement or a guarantee of loan approval — actual lending decisions depend on specific loan program guidelines, which can differ from this simplified rule in either direction. What the two numbers mean 28% — the front-end ratio. Total monthly housing costs (principal, interest, property taxes, homeowners insurance, and HOA dues if applicable) should generally stay at or below 28% of gross monthly income. 36% — the back-end ratio. Total monthly debt payments, including the housing costs above plus all other debt (credit cards, auto loans, student loans), should generally stay at or below 36% of gross monthly income. A quick example On a gross monthly income of $7,000: the 28% guideline suggests keeping total housing costs at or under roughly $1,960 per month, and the 36% guideline suggests keeping total debt pay...