# What is the 28 rule in mortgages?

Asked by: Kitty Watsica PhD  |  Last update: February 9, 2022
Score: 4.4/5 (2 votes)

A Critical Number For Homebuyers
One way to decide how much of your income should go toward your mortgage is to use the 28/36 rule. According to this rule, your mortgage payment shouldn't be more than 28% of your monthly pre-tax income and 36% of your total debt. This is also known as the debt-to-income (DTI) ratio.

## What is the 28% rule?

According to this rule, a household should spend a maximum of 28% of its gross monthly income on total housing expenses and no more than 36% on total debt service, including housing and other debt such as car loans and credit cards.

## What mortgage can I afford 28%?

The 28% rule

To determine how much you can afford using this rule, multiply your monthly gross income by 28%. For example, if you make \$10,000 every month, multiply \$10,000 by 0.28 to get \$2,800. Using these figures, your monthly mortgage payment should be no more than \$2,800.

## How many times your salary can you borrow for a mortgage 2021?

Most mortgage lenders use an income multiple of 4-4.5 times your salary, some offer a 5 times salary mortgage and a few will use 6 times salary, under the right circumstances to work out how much mortgage you can afford.

## Do you have to make 3 times your mortgage?

The total house value should be a maximum of 3 to 5 times your total household income, depending on how much debt you currently have. ... If more than 20% of your monthly income goes to pay down existing debts in the household, dial the purchase price to 3 times.

## Use the 28/36 rule to find out how much house you can afford by Chris Menard

25 related questions found

### How much income do I need for a 400k mortgage?

What income is required for a 400k mortgage? To afford a \$400,000 house, borrowers need \$55,600 in cash to put 10 percent down. With a 30-year mortgage, your monthly income should be at least \$8200 and your monthly payments on existing debt should not exceed \$981.

### How much house can I afford on \$60 000 a year?

The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. That's a \$120,000 to \$150,000 mortgage at \$60,000.

### What mortgage can I afford on 70k salary?

How much should you be spending on a mortgage? According to Brown, you should spend between 28% to 36% of your take-home income on your housing payment. If you make \$70,000 a year, your monthly take-home pay, including tax deductions, will be approximately \$4,328.

### How much income do I need for a 500K mortgage?

The Income Needed To Qualify for A \$500k Mortgage

A good rule of thumb is that the maximum cost of your house should be no more than 2.5 to 3 times your total annual income. This means that if you wanted to purchase a \$500K home or qualify for a \$500K mortgage, your minimum salary should fall between \$165K and \$200K.

### What mortgage can I afford on 75k salary?

I make \$75,000 a year. How much house can I afford? You can afford a \$255,000 house.

### How much house can I afford 50k salary?

A person who makes \$50,000 a year might be able to afford a house worth anywhere from \$180,000 to nearly \$300,000. That's because salary isn't the only variable that determines your home buying budget. You also have to consider your credit score, current debts, mortgage rates, and many other factors.

### How much mortgage can I get if I earn 30000 a year?

If you were to use the 28% rule, you could afford a monthly mortgage payment of \$700 a month on a yearly income of \$30,000. Another guideline to follow is your home should cost no more than 2.5 to 3 times your yearly salary, which means if you make \$30,000 a year, your maximum budget should be \$90,000.

### Does the 28 rule include taxes?

The 28% Front-End Ratio

Total cost of housing includes mortgage loan payment, interest, property taxes, insurance, and HOA fees, excluding utilities.

### What's the 50 30 20 budget rule?

What is the 50-20-30 rule? The 50-20-30 rule is a money management technique that divides your paycheck into three categories: 50% for the essentials, 20% for savings and 30% for everything else.

### What is a comfortable mortgage payment?

Aim to keep your mortgage payment at or below 28% of your pretax monthly income. Aim to keep your total debt payments at or below 40% of your pretax monthly income. Note that 40% should be a maximum. We recommend an even better goal is to keep total debt to a third, or 33%.

### How much should I spend on a house if I make \$100 K?

When attempting to determine how much mortgage you can afford, a general guideline is to multiply your income by at least 2.5 or 3 to get an idea of the maximum housing price you can afford. If you earn approximately \$100,000, the maximum price you would be able to afford would be roughly \$300,000.

### How much do you have to make a year to afford a \$300 000 house?

What income is needed for a 300k mortgage? + A \$300k mortgage with a 4.5% interest rate over 30 years and a \$10k down-payment will require an annual income of \$74,581 to qualify for the loan. You can calculate for even more variations in these parameters with our Mortgage Required Income Calculator.

### What mortgage can I afford with my salary?

A good rule of thumb is that your total mortgage should be no more than 28% of your pre-tax monthly income. You can find this by multiplying your income by 28, then dividing that by 100.

### How much income do you need to buy a \$800000 house?

For homes in the \$800,000 range, which is in the medium-high range for most housing markets, DollarTimes's calculator recommends buyers bring in \$119,371 before tax, assuming a 30-year loan with a 3.25% interest rate. The monthly mortgage payment is estimated at \$2,785.

### What is considered a rich salary?

With a \$500,000+ income, you are considered rich, wherever you live! According to the IRS, any household who makes over \$500,000 a year in 2022 is considered a top 1% income earner. Of course, some parts of the country require a higher income level to be in the top 1% income, e.g. Connecticut at \$580,000.

### How much house can I get for 80000 a year?

So, if you make \$80,000 a year, you should be looking at homes priced between \$240,000 to \$320,000. You can further limit this range by figuring out a comfortable monthly mortgage payment. To do this, take your monthly after-tax income, subtract all current debt payments and then multiply that number by 25%.

### How much savings should I have after buying a house?

The day you get the keys, you should ideally still have at least six months' worth of your income tucked away for home repairs, property taxes and rainy days. In fact, many mortgage lenders require borrowers to prove they'll have some money left after closing.

### How much house can I afford on 120k salary?

If you make \$50,000 a year, your total yearly housing costs should ideally be no more than \$14,000, or \$1,167 a month. If you make \$120,000 a year, you can go up to \$33,600 a year, or \$2,800 a month—as long as your other debts don't push you beyond the 36 percent mark.

### How much do I need to make to buy a \$300 K house with no down payment?

That's \$9,000 on a \$300,000 home – the lowest possible unless you're eligible for a zero–down–payment VA or USDA loan. The minimum credit score requirement is 620 for a conforming loan. But (and you'll have spotted a theme here) individual lenders can impose higher minimums.