The 20/10 Rule is another method that lenders and creditors often use to grant credit to consumers. The 20/10 Rule has two parts with the 20 dealing more specifically with the total debt as opposed to the monthly payments associated with such debt, and the 10 deals with the payments.

The 20 Refers to: Your total annual household debt, excluding your mortgage, should not exceed 20% of your annual take home income. net take home income is what you actually take home after taxes and deductions.

An example: Your take home income is $48K a year. Take $48K x 20% = $9600. Your total consumer debt under the 20 Rule should not exceed $9600

The 10 Refers to: Your total monthly debt payments, excluding your mortgage payments, should not exceed 10% of your net monthly take home income.

An example: Your take home income is $48K a year. Take the $48K divide it by 12 = $4K. Now take the $4K x 10% = $400. Your total monthly payment under the 10 Rule should not exceed $400 per month.

The 28/36 Rule is another method lenders and creditors may use to grant consumers credit. The 28/36 Rule has two parts as well.

The 28 Refers to: Your total mortgage payment, principle and interest, including taxes, insurance, mortgage insurance and homeowners fees should no exceed 28% of your gross monthly gross income. Gross monthly income is what you actually make before taxes and deductions are taken out.

An example: Your total gross income is $72K a year. Take the $72K divide it by 12 = $6K. Now take that $6K x 28% = $1680. Your total monthly payments under the 28 Rule should not exceed $1680 of your $6K gross monthly income.

The 35 Refers to: Your total mortgage payment, principle & interest, including taxes, insurance, mortgage insurance, homeowners fees plus other debts, auto loans, student loans, credit cards, etc., should not exceed 36% of your gross monthly income.

An example: Your total gross income is $72K a year. Take the $72K divide by 12 = $6K. Now take the $6K x 36% = $2160. Your total monthly payments under the 36 rule should not exceed $2160 of your $6K gross monthly income.