Qualification Ratio | Calculator

Gross Monthly Income (Before Taxes)

Qualification Ratio (The 28/36 Rule):

The qualification ratio, also known as the 28/36 rule, is a lending standard that determines how much of your monthly gross income can be dedicated to housing expenses. The rules are:

  • 28%: Your monthly housing expenses (mortgage payments, property taxes, and insurance) should not exceed 28% of your pre-tax gross income.

  • 36%: Your total debt payments (including housing expenses, credit cards, car loans, student loans, etc.) should not exceed 36% of your pre-tax gross income.

This means that if you earn $4,000 per month in gross income, for example:

  • You can afford a mortgage payment of up to $1,120 (28% of $4,000) without breaking the qualification ratio.

  • Your total debt payments should not exceed $1,440 (36% of $4,000) to stay within the qualification ratio.

The 28/36 rule helps lenders determine whether you can afford a mortgage and other debts based on your income. It’s an important consideration for anyone looking to purchase or refinance a home.