Twenty Eight Thirty Six Rule (28/36 Rule)

The 28/36 rule is a financial guideline that lenders use to determine whether or not to approve a mortgage loan. The rule states that a borrower's total monthly debt payments, including the mortgage payment, should not exceed 28% of their gross monthly income. The remaining 36% of the borrower's income should be available for other expenses, such as food, transportation, and other living costs.

The 28/36 rule is a general guideline, and lenders may have different requirements. However, it is a good rule of thumb to follow when you are shopping for a mortgage loan. If your debt-to-income ratio is too high, you may have difficulty qualifying for a loan.

There are a few things to keep in mind when calculating your debt-to-income ratio. First, you need to include all of your monthly debt payments, including your mortgage payment, car payments, student loans, and credit card payments. Second, you need to use your gross monthly income, which is your income before taxes.

Once you have calculated your debt-to-income ratio, you can compare it to the 28/36 rule. If your ratio is below 28%, you are in good shape. If your ratio is above 36%, you may have difficulty qualifying for a loan.

The 28/36 rule is just one of many factors that lenders consider when making a lending decision. Other factors include your credit score, your employment history, and your down payment. However, the 28/36 rule is a good place to start when you are shopping for a mortgage loan.

Here are some additional tips for following the 28/36 rule:

* Make extra payments on your debts to reduce your monthly payments.
* Get a part-time job or start a side hustle to increase your income.
* Downsize your home or car to reduce your monthly payments.
* If you are struggling to make your payments, talk to your lender about a repayment plan.

By following these tips, you can increase your chances of qualifying for a mortgage loan and getting the best possible terms.