Do you know “The Golden Rule” that lenders use to gauge your Expense-to-Income Ratio for a bank statement analysis?
It’s often recommended that only 50% of your income should be directed towards expenses.
But how do we determine a safe debt level?
The 28/36 Rule:
1) Housing: No more than 28% of your gross monthly income should go towards housing expenses like monthly house rent, gas bill, electricity bill, water bill, any property tax, etc.
2) Debt: Your total monthly debt service on loans or any credit shouldn’t surpass 36%.
This rule ensures a balanced approach to financial commitments and aligns with the broader goal of maintaining a healthy Expense to Income Ratio for the borrowers.
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