28/36 Rule Calculator
Calculate your debt-to-income ratios using the 28/36 rule. This calculator helps determine how much house you can afford based on your income and existing debts, following FHA and conventional loan guidelines.
Debt-to-Income Ratios
Housing Affordability
Mortgage Qualification
Understanding the 28/36 Rule
The 28/36 rule is a guideline used by lenders to determine how much house you can afford based on your debt-to-income ratio (DTI). This rule helps ensure that your housing costs and total debts don't become an overwhelming burden on your finances.
What are DTI Ratios?
- Front-End DTI (28%): Housing costs divided by gross monthly income
- Back-End DTI (36%): All debts including housing divided by gross monthly income
- Housing Costs: Mortgage principal, interest, taxes, insurance, HOA fees
- All Debts: Housing costs plus car loans, student loans, credit cards, etc.
DTI Ratio Calculations
Front-End DTI = (Housing Costs ÷ Monthly Income) × 100
Back-End DTI = (Housing Costs + Other Debts ÷ Monthly Income) × 100
Lender DTI Guidelines
| Loan Type | Front-End DTI | Back-End DTI | Notes |
|---|---|---|---|
| FHA Loans | 31% | 43% | More flexible for first-time buyers |
| Conventional Loans | 28% | 36% | Standard qualification |
| VA Loans | 31% | 41% | Veterans benefits |
| USDA Loans | 29% | 41% | Rural properties |
| Portfolio Lenders | 33% | 45% | Local banks, credit unions |
Why DTI Ratios Matter
- Risk Assessment: Lenders use DTI to assess default risk
- Affordability: Ensures housing costs fit your budget
- Financial Health: Prevents overextending on housing
- Qualification: Key factor in loan approval decisions
- Stress Testing: Shows resilience to financial shocks
Improving Your DTI Ratios
- Pay Down Debt: Reduce credit card balances and loan payments
- Increase Income: Additional jobs, raises, or side hustles
- Larger Down Payment: Reduces required monthly mortgage payment
- Shop for Better Rates: Lower interest rates reduce monthly payments
- Extend Loan Term: Longer terms lower monthly payments
DTI Ratio Categories
- Excellent (=28% front-end, =36% back-end): Prime borrowing conditions
- Good (29-33% front-end, 37-42% back-end): Still favorable terms
- Fair (34-37% front-end, 43-45% back-end): May require explanation
- Poor (38%+ front-end, 46%+ back-end): Difficult to qualify
Beyond the 28/36 Rule
While the 28/36 rule is a good starting point, lenders may consider:
- Credit Score: Higher scores allow higher DTI ratios
- Down Payment: Larger down payments improve qualification
- Assets: Savings and investments show financial stability
- Employment Stability: Consistent income history
- Local Market: Some areas have different standards
Tip: The 28/36 rule provides a conservative guideline for housing affordability. While some lenders may approve loans with higher DTI ratios, staying within these limits ensures your housing costs remain manageable and provides a buffer for unexpected expenses or interest rate changes.