Skip to content

Indian Exam Hub

Building The Largest Database For Students of India & World

Menu
  • Main Website
  • Free Mock Test
  • Fee Courses
  • Live News
  • Indian Polity
  • Shop
  • Cart
    • Checkout
  • Checkout
  • Youtube
Menu

Twenty Eight Thirty Six Rule (28/36 Rule)

Posted on October 19, 2025October 20, 2025 by user

28/36 Rule: What It Is and How to Use It

The 28/36 rule is a simple guideline lenders and consumers use to judge how much debt a household can safely carry. It says:

  • Spend no more than 28% of your gross monthly income on total housing expenses (mortgage or rent, taxes, insurance, HOA fees).
  • Spend no more than 36% of your gross monthly income on total debt payments (housing plus other debt such as auto loans, student loans, credit cards).

Key takeaways

  • The rule helps estimate affordable housing and overall debt levels relative to income.
  • Lenders often use it as part of underwriting, but many vary the thresholds depending on borrower qualifications.
  • Staying within these limits can improve the chance of loan approval; very good credit may allow some leeway.
  • Multiple hard credit inquiries can reduce credit scores and affect approval chances.

How the rule works

The rule is based on gross monthly income (income before taxes and payroll deductions). Lenders compare your expected housing payment and total monthly debt payments to that income to calculate two ratios:

Explore More Resources

  • › Read more Government Exam Guru
  • › Free Thousands of Mock Test for Any Exam
  • › Live News Updates
  • › Read Books For Free
  1. Housing ratio = (monthly housing expenses) / (gross monthly income)
  2. Debt-to-income (DTI) ratio = (all monthly debt payments) / (gross monthly income)

Under the 28/36 rule, the housing ratio should be ≤ 28% and the DTI should be ≤ 36%.

What counts as gross income

Gross income is all income before taxes and deductions — the number shown before withholdings on your paystub. The 28/36 calculations use gross (pre-tax) monthly income.

Explore More Resources

  • › Read more Government Exam Guru
  • › Free Thousands of Mock Test for Any Exam
  • › Live News Updates
  • › Read Books For Free

What counts as housing expenses

Housing expenses typically include:

  • Monthly mortgage principal and interest (or rent)
  • Property taxes
  • Homeowners insurance
  • Homeowners association (HOA) fees

Some lenders may also consider utilities or other housing-related costs, but those are often folded into total debt rather than the housing line item.

Explore More Resources

  • › Read more Government Exam Guru
  • › Free Thousands of Mock Test for Any Exam
  • › Live News Updates
  • › Read Books For Free

What counts toward DTI

DTI includes all recurring monthly debt obligations, such as:

  • Mortgage or rent payments
  • Auto loan payments
  • Minimum required credit card payments
  • Student loan payments
  • Personal loans and home equity loan payments

Example

If your gross monthly income is $5,000:

Explore More Resources

  • › Read more Government Exam Guru
  • › Free Thousands of Mock Test for Any Exam
  • › Live News Updates
  • › Read Books For Free
  • 28% housing limit = 0.28 × $5,000 = $1,400 per month for housing.
  • 36% total debt limit = 0.36 × $5,000 = $1,800 per month for all debt.

So if your housing costs are $1,000, you could have up to $800 per month in other debt payments before exceeding the 36% DTI cap.

Special considerations

  • Lenders don’t all use the 28/36 rule rigidly. Some require lower percentages for riskier borrowers or higher standards for certain loan products; others may allow higher DTIs for applicants with strong credit scores, sizable savings, or compensating factors.
  • Every loan application typically triggers a credit inquiry. Multiple hard inquiries in a short time can lower your credit score and reduce approval odds.
  • If your ratios are borderline, improving your credit score, paying down debt, or increasing income can help.

Bottom line

The 28/36 rule is a practical, conservative framework to judge affordable housing payments and overall indebtedness relative to income. Use it when budgeting or preparing to apply for loans, but remember lenders may adjust thresholds based on credit history and other factors. If your ratios are close to the limits, consider improving credit or reducing debt before applying.

Explore More Resources

  • › Read more Government Exam Guru
  • › Free Thousands of Mock Test for Any Exam
  • › Live News Updates
  • › Read Books For Free

Sources

Social Security Administration — Gross and net income definitions
Consumer Financial Protection Bureau — Debt-to-income ratio guidance
Federal Deposit Insurance Corporation — Loans and mortgages information

Youtube / Audibook / Free Courese

  • Financial Terms
  • Geography
  • Indian Law Basics
  • Internal Security
  • International Relations
  • Uncategorized
  • World Economy
Government Exam GuruSeptember 15, 2025
Federal Reserve BankOctober 16, 2025
Economy Of TuvaluOctober 15, 2025
Why Bharat Matters Chapter 6: Navigating Twin Fault Lines in the Amrit KaalOctober 14, 2025
Why Bharat Matters Chapter 11: Performance, Profile, and the Global SouthOctober 14, 2025
Baltic ShieldOctober 14, 2025