Usda affordability calculator1/3/2024 ![]() ![]() Down payments, closing costs, mortgage insurance and other fees ![]() ![]() These amounts are the upper limits of what you should plan on spending - if possible keep these costs under the 28/36 thresholds. You should also aim to keep your total monthly household debt under $1,800 (or 36% of your pay). That includes your mortgage, credit card payments, car loans and student loans.įor example, if you make $5,000 per month (before taxes), using the 28% rule, you could safely spend up to $1,400 on your housing expenses. This rule also says that you should keep all of your household debt under 36% of your gross monthly income. So what is the 28/36 rule? This simple rule of thumb says that you should spend a maximum of 28% of your gross monthly income - that’s your salary before any taxes or deductions come out - on housing-related expenses, such as your mortgage payment, principal, interest, taxes, private mortgage insurance and homeowners dues. Not only can this rule give you insight into your overall financial health, but many lenders use it to determine whether you’re a good loan candidate. You can quickly gauge how much you can safely spend on a mortgage and other debts by using the 28/36 rule. If you want to figure out how much your monthly payment will be instead, check out our mortgage calculator. The formula used is: Monthly payment = (income x DTI) – debts – tax – insurance. Finally, the calculator subtracts your other estimated monthly expenses, such as property taxes and homeowners insurance, to determine your monthly housing budget - and the total home price you can afford. It uses your monthly income and your current monthly debt payments to calculate the monthly payments you can afford to stay under a target debt-to-income ratio. This calculator uses your ZIP code to estimate a property tax rate, and your credit score to estimate a mortgage interest rate. How our mortgage affordability calculator works ![]()
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