What is the 28/36 rule?
A traditional guideline: housing costs shouldn't exceed 28% of gross income (front-end) and total debt shouldn't exceed 36% (back-end). Modern lending may allow higher ratios with compensating factors.
What debts are included in DTI?
Monthly minimums on credit cards, auto loans, student loans, personal loans, child support, alimony, and your proposed mortgage payment. Utilities and groceries typically aren't included.
How much should I put down?
20% down avoids PMI on conventional loans. However, FHA allows 3.5% and VA allows 0%. Consider your cash reserves and emergency fund needs.
What's included in monthly payment?
PITI: Principal, Interest, Taxes, and Insurance. May also include PMI/MIP and HOA fees.
How does credit score affect affordability?
Higher credit scores typically qualify for lower interest rates, meaning you can afford a more expensive home with the same monthly payment. A 0.5% rate difference can change affordability by 5-10%.