Monthly Payment Breakdown
$0
Total Monthly Payment (PITI)
Front-end DTI (housing only)
0%
Ideal: under 28% | Maximum (most lenders): 31%
Back-end DTI (all debts)
0%
Ideal: under 36% | Maximum (most lenders): 43%
The 28/36 Rule Explained
Lenders use debt-to-income ratios to determine how much mortgage you qualify for. The classic rule of thumb:
28% rule: Your monthly housing costs (PITI — principal, interest, taxes, insurance) should not exceed 28% of your gross monthly income.
36% rule: Your total monthly debt payments (housing + car + student loans + credit cards) should not exceed 36% of gross monthly income.
What Lenders Actually Allow
- Conventional loans: up to 43-45% back-end DTI
- FHA loans: up to 50% back-end DTI with compensating factors
- VA loans: no official limit, but 41% is common guideline
- Jumbo loans: typically stricter, often 43% max
Hidden Costs of Homeownership
Budget beyond the mortgage payment:
- Maintenance: 1-2% of home value per year. $400K house = $4,000-8,000/year.
- PMI: If your down payment is under 20%, expect 0.5-1.5% of loan amount annually until you reach 20% equity.
- Closing costs: 2-5% of purchase price, paid upfront.
- Utilities: Larger homes cost more to heat, cool, and maintain.
Down Payment Impact
A larger down payment reduces your loan amount, eliminates PMI (at 20%+), and lowers monthly payments. It also gives you immediate equity buffer against market drops.