What is the 28/36 rule and how can it help you get approved for a mortgage? (2024)

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
• Homeowners Insurance
• Private mortgage insurance
• HOA fees and other payments

Other forms of debt besides your mortgage which factor into the "36" portion of the rule include credit card bills, auto loans, student loans, personal loans, alimony and child support payments.

If your gross monthly income is $6,000, the 28/36 rule says you can safely spend up to $1,680 on housing and up to $2,160 on all of your bills. Of course, that doesn't mean that you should spend to the maximum — it's a ceiling.

Since lenders look at a variety of factors, the 28/36 rule isn't necessarily a hard-and-fast mandate. When you consider how much property values have increased in recent years, even wages have stagnated, the rule may feel unrealistic.

The average monthly mortgage payment was $1,402 at the start of 2024,, according to a report from bill pay site Doxo. To keep to the 28/36 rule, that would require a gross monthly income of $5,392, or $64,704 a year.According to the U.S. Bureau of Labor Statistics, the average U.S. annual salary in the fourth quarter of 2023 was $4,949, or $59,384 a year.

Some lenders are more flexible with their requirements. Navy Federal Credit Union doesn't require a minimum credit score, for example. Instead, it works with applicants to find a mortgage that's right for them.

If you find that you're spending more on repaying debt than the rule suggests, try to reduce your debt load before applying for a mortgage.

There are many ways to pay down debt quickly. The snowball method involves paying off your smallest balance first and working your way up to the largest balance. With the avalanche method, you pay off the debt with the highest interest rate first and work your way down to the lowest interest rate.

Your debt load isn't the only criteria that lenders use to judge whether you're able to take on a mortgage debt. Your credit score is one of the largest indicators lenders use to approve borrowers. A higher credit score indicates that the borrower is less likely to default than someone with a lower credit score.

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