What is the recommended maximum percentage of gross income that housing payments (PITI) should be?

The recommended maximum percentage of gross income that housing payments, including principal, interest, taxes, and insurance (often referred to as PITI), should be is generally around 28% to 33%. This recommendation is grounded in the idea of maintaining financial stability and ensuring that individuals do not overextend themselves in terms of housing costs.

When housing payments exceed this percentage, it may lead to financial strain, making it difficult for individuals to cover other essential expenses like utilities, food, transportation, and savings. Thus, 33% serves as a higher threshold within the commonly accepted range, indicating that while some flexibility exists, staying below this limit helps to promote a solid financial foundation and can enhance one's ability to manage other financial obligations effectively.

It's important, however, to consider different personal circumstances, local housing markets, and overall financial health when making decisions about housing costs.