Question

As you rule, you should not spend more than______of your pre-tax dollars on housing?

Answer 1

36%

Step-by-step explanation:

According to this rule, a household should spend a maximum of 28% of its gross monthly income on total housing expenses and no more than 36% on total debt service, including housing and other debt such as car loans and credit cards. Lenders often use this rule to assess whether to extend credit to borrowers.

Answer 2

As you rule, you should not spend more than 28-31% of your pre-tax dollars on housing.

What is pretax?

It's common knowledge among financial experts that people shouldn't spend more than 28–31% of their pre-tax income on housing. We refer to this general rule of thumb as the 28/36 rule.

It indicates that housing costs should not account for more than 28% of your gross monthly income, and that the overall amount of debt payments, including those for housing and other obligations, should not exceed 36% of your gross monthly income.

Therefore you should not spend more than 28-31% of your pre-tax dollars on housing.