The Rule of 36/43 Provides a Helpful Framework For Buying and Financing College

The Debt To Income Ratio (DTI) that lenders use to assess how much house you can afford is 36/43.  This rule calculates that your monthly mortgage costs (which includes principal, interest, property taxes and homeowners insurance) should be no more than 36% of your gross monthly income.  Your total monthly debt  payments, including your monthly mortgage payment and other debts (auto, credit cards, education loan payments, etc.) should be no more than 43% of your gross monthly income.  We apply this rule to the amount of college you can afford in order to prevent you from getting overextended.  Use the calculator below to see where you stand.  It might help you get some guardrails in place for your college shopping.  If you’d like some professional assistance with college funding, please feel free to contact us for a no charge, no obligation consultation.