What percentage of your income should go toward a mortgage?

Learn about the 28%- and 36%-income guidelines

Many mortgage lenders use the 28% guideline when they are deciding how much money you can borrow to finance a home.

This guideline states that you should spend no more than 28% of your monthly gross income on your mortgage payment, which includes principal, interest, property taxes, homeowners insurance, and mortgage insurance if your loan requires it.

For example, if your monthly gross income is $10,000, then your mortgage payment should be no more than $2,800, according to the 28% guideline.

Lenders also use the 36% guideline when they are making their decisions. The 36% guideline states that the total monthly cost of all your debt payments, including your mortgage, should be no more than 36% of your monthly gross income.

For example, if your monthly gross income is $10,000, and you make monthly payments on a car and student loans as well as your mortgage, the total cost of all these debt payments should be no more than $3,600.

Are the 28%- and 36%-income guidelines official rules?

No. The 28%- and 36%-income guidelines are not official rules that mortgage lenders are required to follow for every borrower. However, they are good guidelines to follow when you are applying for a mortgage, because following them can improve your chances of getting approved.

Freedom Mortgage looks at your credit history and finances, as well as your income, when we review your application. We may approve you for a mortgage that has a monthly payment higher than the 28% and 36% guidelines. We may also approve you for a mortgage with a payment lower than these guidelines. Learn more about mortgage underwriting.

Why do mortgage lenders use the 28%- and 36%-income guidelines?

For many homeowners, the 28% and 36% guidelines are good rules of thumb for home affordability. These percentages are one way to help you make sure you can afford your mortgage payment, as well as your other bills and expenses.

Mortgage lenders like these guidelines for the same reason. They help make sure their borrowers get mortgages they can afford and have payments they can make each month.

Can you get a mortgage when your debt payments are more than 36% of your income?

Yes, it is possible to get approved for a mortgage when your monthly debt payments are more than 36% of your monthly gross income. These percentages vary by loan type:

• FHA loans. Lenders may approve an FHA loan when your total debt payments are no higher than 43% of your monthly gross income.
• VA loans. Lenders may approve a VA loan when your total debt payments are no higher than 41% of your monthly gross income.
• Conventional loans. Lenders may approve a Conventional loan when your total debt payments are between 43% and 45% of your monthly gross income.

Remember that you'll have to meet your lender's credit and financial requirements to be approved for these loans. Your lender may have higher credit and financial requirements when your debt payments are higher than the 36% guideline.

Finally, keep in mind that just because you can get approved for a mortgage with a higher payment does not mean that you should choose that mortgage payment. One of the advantages of the 36% income guideline is that it helps keep your payments affordable and leaves more room in your monthly budget to pay for other expenses.