The 28 part of the rule is that you shouldn’t spend more than 28% of your pre-tax monthly income on home-related expenses. The 36 part is that you shouldn’t spend more than 36% of your income on monthly debt payments, including your mortgage, credit cards, and other loans such as auto and student loans.
It’s a good rule of thumb to start with, but it’s also important to consider your entire financial picture when evaluating home-related expenses.
With a VA loan you’re not required to make a down payment, and you don’t have to pay PMI.
An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate-income borrowers, FHA loans require a lower minimum down payment (as low as 3.5%) and credit score than many conventional loans.
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.
For example, let’s say your pre-tax monthly income is $5,000. Your maximum monthly mortgage payment would then be $1,400: $5,000 x 28 = $140,000. $140,000 ÷ 100 = $1,400
It depends on your household income, monthly debt payments, and the amount of money you can put toward a down payment. Our mortgage affordability calculator above can help determine a comfortable mortgage payment for you.