What is the maximum percentage allowed for housing expenses in relation to gross monthly income?

The correct answer is 28%. This figure is significant as it generally reflects industry standards for how much of a household’s gross monthly income should be allocated towards housing expenses. This standard is often utilized by lenders and financial advisors to ensure that homeowners do not overextend themselves financially.

By keeping housing expenses, which typically include mortgage payments, property taxes, and homeowner’s insurance, within this 28% threshold, individuals are less likely to experience financial strain. This guideline is important for maintaining a healthy budget and ensuring that households can cover other necessary expenses such as food, transportation, and savings.

The other options, while they reflect different perspectives on budgeting for housing costs, do not align with the commonly accepted 28% benchmark. For example, 30% is often cited as a more lenient guideline but risks overburdening families with housing costs relative to their overall financial situation.