Do Your Finances Meet the 28/36 Rule?


If you're considering buying a home, especially as a first-time buyer, it's important to take a close look at your finances before you start shopping.

Start with the 28/36 rule. Many lenders use it to determine credit eligibility.

The "28" refers to the percentage of your gross monthly household income that should be allocated for housing costs each month, including principal, interest, taxes and insurance. The "36" represents the total debt that you carry. It shouldn't exceed 36 percent of your total income.

As long as your monthly debt – like car, student loan and credit card payments – doesn't exceed the 36 percent, you're probably in good shape to qualify for the loan amount that meets your "28" calculation.

There's a sample 28/36 calculation in the RE/MAX Home Buying Guide. Check it out. The guide is a great reference.

Looking for more personal attention? Contact Denise D'Amico who can guide you through the entire home-buying process. You can reach Denise direct at 847-551-9290 or e-mail Denise.