Professional User Guide
1. Understanding the 28/36 Rule
Lenders typically prefer that your housing costs (mortgage, insurance, taxes) don't exceed 28% of your gross income, and your total debt doesn't exceed 36%. This calculator uses this industry standard to estimate your "safe" borrowing limit.
2. The Impact of Monthly Debts
Your existing monthly obligations, such as car loans, student loans, and credit card minimums, directly reduce the amount a bank will lend you for a home. Reducing these debts before applying can significantly increase your affordability.
Frequently Asked Questions
What is the 28/36 rule?
The 28/36 rule is a guide used by lenders: housing expenses should not exceed 28% of gross monthly income, and total debt payments should not exceed 36%.
How does down payment affect affordability?
A larger down payment reduces the loan amount needed, which lowers your monthly payments and allows you to afford a higher-priced home for the same monthly cost.