What is the 28 36 rule?
Asked by: Jovanny Stoltenberg | Last update: August 19, 2025Score: 4.2/5 (20 votes)
How does the 28 36 rule work?
The 28/36 rule
It suggests limiting your mortgage costs to 28% of your gross monthly income and keeping your total debt payments, including your mortgage, car loans, student loans, credit card debt and any other debts, below 36%.
How much house can I afford if I make $120000 a year?
This field is for validation purposes and should be left unchanged. With a $120,000 annual salary, you could potentially afford a house priced between $450,000 and $500,000, depending on your financial situation, credit score, and current market conditions.
How do you calculate 28/36 ratio?
According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment.
Does the 28-36 rule include taxes and insurance?
The front-end ratio of the 28/36 rule is the percentage of your income that would be spent on your monthly mortgage payment and other housing expenses, including taxes, insurance, and HOA fees.
Use the 28/36 rule to find out how much house you can afford by Chris Menard
How much house can I afford if I make $70,000 a year?
The house you can afford on a $70,000 income will likely be between $290,000 to $360,000. However, your home-buying budget depends on quite a few financial factors — not just your salary.
How much does a mortgage payment increase for every $5000?
If I pay $5,000 more for the house, how much will my monthly payment go up? Not as much as you might think! In general, estimate about $5 per $1,000 or $20 per $5,000 increase in the purchase price.
How much house can I afford if I make $90000 a year?
Earning $90,000 a year puts you in a good position to afford a home priced at around $350,000, as long as you don't already have significant other debts to pay. That's good news considering the U.S. average home value these days is just above $342,000.
Does the 28% rule include utilities?
Some lenders may include your utilities, too, but this would generally be categorized as contributing to your total debts.
What qualifies as house poor?
House Poor: What It Means And How To Avoid It. What is house poor? The expressions “house poor” and “house broke” refer to homeowners spending more than they can afford on housing costs, which can include mortgage payments, property taxes, homeowners insurance, and maintenance and utility costs.
Can I afford a 500k house if I make 100k a year?
To comfortably afford a $500,000 house, you'll likely need an annual income between $125,000 to $160,000, depending on your specific financial situation and the terms of your mortgage. Remember, just because you can qualify for a loan doesn't mean you should stretch your budget to the maximum.
Is making 10k a month good?
$10,000 per month is the most common. I think this goal is popular because it's a comfortable six-figure income for just about anyone. You can't live lavishly, but you can live comfortably on $10,000 per month in income.
What is a good salary?
While the definition of "comfortable living" can vary from person to person, a general consensus suggests that an annual income of $75,000 to $100,000 can provide a comfortable lifestyle for many individuals and families in the United States.
How much house can you afford without being house poor?
The 28% rule is a general guideline for how much you should spend on a house. The rule says you should try to spend no more than 28% of your monthly gross income on housing expenses. To determine what your monthly homeownership budget should be under this rule, simply multiply your monthly income by 28%.
What is the 28 36 rule or the mortgage rule of thumb formula?
Find Out How Much Mortgage I Can Afford
According to the rule, you should spend no more than 28% of your pre-tax income on your mortgage payment and no more than 36% toward total debt obligations. Your mortgage, car payment, credit cards and student loans all count as debt.
What is the 3 7 3 rule in mortgage?
Timing Requirements – The “3/7/3 Rule”
The initial Truth in Lending Statement must be delivered to the consumer within 3 business days of the receipt of the loan application by the lender. The TILA statement is presumed to be delivered to the consumer 3 business days after it is mailed.
What is the 30% rule for utilities?
The 30% rule says that renters should spend no more than a third of their gross income on rent and utility payments. The less you can spend on rent and utilities, the more money you'll have to fund other financial goals, like saving for emergencies, paying off debt, and planning for retirement.
How much is too much for a mortgage?
While the Consumer Financial Protection Bureau (CFPB) reports that banks will qualify mortgage amounts that are up to 43% of a borrower's monthly income, you might not want to take on that much debt. "You want to make sure that your monthly mortgage is no more than 28% of your gross monthly income," says Reyes.
How much house can I afford 28-36?
The 28/36 rule dictates that you spend no more than 28 percent of your gross monthly income on housing costs and no more than 36 percent on all of your debt combined, including those housing costs.
Is 100k a year good for a single person?
Generally speaking, $100,000 is a good six-figure salary for a single person. Before taxes, $100,00 works out to roughly $8,333 per month. Whether that's enough for you depends largely on where you live. Savings, property ownership, and discretionary funds may be achievable in an area with a low cost of living.
Can I afford a 400k house on 100k salary?
100k Salary How Much House Can I Afford: Example
Assuming a 20% down payment and a 4% interest rate on a 30-year fixed-rate mortgage, you could potentially afford a home priced around $400,000.
How much house can I buy for $3,500 a month?
A $3,500 per month mortgage in the United States, based on our calculations, will put you in an above-average price range in many cities, or let you at least get a foot in the door in high cost of living areas. That price point is $550,000.
What happens if I pay 3 extra mortgage payments a year?
Making additional principal payments will shorten the length of your mortgage term and allow you to build equity faster. Because your balance is being paid down faster, you'll have fewer total payments to make, in-turn leading to more savings.
What is a good mortgage rate?
A good rate for a mortgage now is anything below the average rate for a 30-year mortgage, which is 6.67% in mid-June 2023. But a good mortgage rate can be different for every borrower, depending on their financial situation and credit score, as well as the type of home loan they're applying for, among other factors.
How much house for $1500 a month?
If you bring the national average down payment for first-time homebuyers of 9% to closing and have a 6.9% rate on a 30-year fixed mortgage, that's just shy of $1,500 a month in principal and interest for that $250,000 home.