The 28/36 Rule in Florida: A Budget Guideline the Insurance Bill Breaks
The 28/36 rule Florida buyers hear about caps housing at 28 percent of income and all debt at 36. Lenders allow more; Florida's taxes and insurance make the old rule closer to right than the lender's limit.
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The 28/36 rule Florida buyers hear about says housing should take no more than 28 percent of gross income and all debt no more than 36.
Lenders approve far above it. Florida's tax and insurance costs make the old rule closer to right than the lender's limit. Our affordability calculator runs it.
Where the rule comes from
Decades-old underwriting guidance from a lower-rate, lower-cost era.
The CFPB's affordability guidance describes debt-to-income in similar terms.
Not a law; a rule of thumb.
Front-end 28, back-end 36.
Still a sound budget.
What lenders actually allow
Conventional approvals up to 45 to 50 percent back-end with automated underwriting.
See our guide to maximum DTI in Florida.
FHA similar with compensating factors.
VA uses residual income.
The gap between 36 and 50 is where house-poor lives.
The front-end number
Full housing payment: principal, interest, taxes, insurance, mortgage insurance, dues.
See our guide to what PITI is in Florida.
Florida's taxes and insurance make it large.
Twenty-eight percent of gross income buys less house here than elsewhere.
That is the honest result.
The back-end number
Housing plus car loans, student loans, credit card minimums, child support.
See our guide to student loans and mortgages in Florida.
Thirty-six percent leaves room for living.
Fifty percent does not.
Lenders approve; budgets decide.
Gross versus net
The rule uses gross income before taxes.
Florida has no state income tax, which helps the net.
Still, 36 percent of gross is a larger share of take-home.
Run the payment against your actual deposit, not your salary.
That is the number you live on.
Why Florida breaks it
Insurance premiums that rise faster than income.
See our guide to Florida homeowners insurance cost.
Property taxes that reset at purchase.
Association dues and assessments on condos.
A payment approved at 45 percent grows toward 50 on its own.
Using the rule to set a ceiling
Compute 28 percent of gross monthly income.
Subtract realistic taxes, insurance and dues.
See our guide to property tax estimates for new buyers in Florida.
What remains is principal and interest, which sets the loan amount.
That loan amount plus your down payment is the price ceiling.
When to go above it
Rising income with a clear trajectory.
No other debt.
Large reserves.
A rent payment already at the same level.
See our guide to house poor in Florida for the other outcome.
When to stay below it
Variable or commission income.
See our guide to commission and bonus income in Florida.
An older home with likely repairs.
A condo with assessment risk.
A household planning for children or a single income.
The lender's view
Underwriters approve to the programme limit if the file supports it.
See our guide to mortgage pre-approvals in Florida.
A pre-approval at the maximum is not a recommendation.
Ask for the payment at 28 percent as well.
Shop between the two.
First-year costs
Moving, furnishing, repairs, the tax reset and the first insurance renewal.
See our guide to first-year homeowner costs in Florida.
A budget at 36 percent absorbs them.
A budget at 50 percent does not.
The rule's margin is for exactly this.
Emergency fund
Three to six months of the full housing payment after closing.
See our guide to first-year homeowner costs in Florida.
A hurricane deductible on top.
The 28/36 budget leaves room to build it.
The 50 percent budget spends it.
Two-income households
Qualifying on two incomes at 45 percent leaves no margin if one stops.
Qualifying on one income at 36 percent leaves the second as reserve.
See our guide to buying a home while pregnant in Florida for one common transition.
Decide which household you are.
The lender will approve either.
A worked example
A household earning a typical South Florida professional income.
At 28 percent, after Florida taxes and insurance, the loan supports a modest home.
At 45 percent, the lender approves a home nearly twice the price.
Two years of tax and insurance growth on the larger home consume the margin.
The smaller home is the one still comfortable in year three.
Condo dues in the ratio
Association dues count in the front-end number.
See our guide to HOA and mortgage approval in Florida.
High-amenity buildings can add a large share.
Assessments do not appear until they are levied.
Leave room for them.
Testing the number against take-home
Multiply your monthly net deposit by the payment share you are considering.
Subtract the payment from net pay and look at what remains.
Florida's no-income-tax net is higher than most states', which helps.
If the remainder does not cover living costs and savings, the ratio is too high.
The lender will not run this test; you must.
Where to start
Compute 28 and 36 percent of your gross income.
Subtract realistic Florida taxes, insurance and dues to find the loan the rule supports.
Then get a pre-approval at that number and at the lender's maximum, and shop between them.