What percentage of monthly income do lenders typically allow borrowers to spend on PITI?

Lenders often use a guideline known as the "housing expense ratio" to determine how much of a borrower's monthly income should be allocated to housing costs, which include Principal, Interest, Taxes, and Insurance (PITI). Typically, this guideline suggests that no more than 28% of a borrower's gross monthly income should go towards these housing expenses. Maintaining this percentage helps ensure that borrowers are not overextending themselves financially and can comfortably manage their mortgage payments alongside other living expenses.

While some lenders may allow a slightly higher percentage depending on the borrower's overall financial situation, including their credit history and other debts, the 28% benchmark remains a standard threshold in the industry for qualifying borrowers for a mortgage. This aligns the borrower's mortgage obligations with their income in a sustainable manner, reducing the risk of default.