what is the 28 36 rule 
the 28 36 rule refers to a common sense approach used to calculate the amount of debt an individual or household should assume a household should spend a maximum of 28 of its gross monthly income on total housing expenses according to this rule and no more than 36 on total debt service this includes housing and other debt such as car loans and credit cards lenders often use this rule to assess whether to extend credit to borrowers understanding the 28 36 rulelenders use varying criteria to determine whether to approve credit applications one of the main considerations is an individual s credit score lenders usually require that a credit score must fall within a certain range but a credit score is not the only consideration lenders also consider a borrower s income and debt to income dti ratio another factor is the 28 36 rule which is an important calculation that determines a consumer s financial status it helps determine how much debt a consumer can safely assume based on their income other debts and financial needs the premise is that debt loads over the 28 36 parameters are likely difficult for an individual or household to sustain they may eventually lead to default this rule is a guide that lenders use to structure underwriting requirements some lenders may vary these parameters based on a borrower s credit score potentially allowing high credit score borrowers to have slightly higher dti ratios most traditional mortgage lenders require a maximum household expense to income ratio of 28 and a maximum total debt to income ratio of 36 for loan approval lenders that use the 28 36 rule in their credit assessments may include questions about housing expenses and comprehensive debt accounts in their credit applications special considerationsthe 28 36 rule is a standard that most lenders use before advancing any credit so consumers should be aware of the rule before they apply for any type of loan lenders pull credit checks for every application they receive these hard inquiries show up on a consumer s credit report having multiple inquiries over a short period can affect a consumer s credit score and may hinder their chance of getting credit in the future example of the 28 36 rulelet s say an individual or family brings home a monthly income of 5 000 they could budget up to 1 400 for a monthly mortgage payment and housing expenses if they want to adhere to the 28 36 rule but it would leave an additional 800 for making other types of loan repayments if they confined their housing expenses to just 1 000 or 20 