The 28-36 Rule is used to decide how much debt an individual can take on. The rule means that an individual should spend a maximum of 28% of total income on housing expenses. 36% is considered the highest percentage of income allowable for housing expenses. This is not a hard and fast rule. In many areas of the country it’s simply impossible for most to buy a home and stay below 36%. In the SF Bay Area for example, the median home price is north of $750k. If the 28/36 Rule was always used, there would be a small segment of people who would qualify for a mortgage.
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