28/36 Rule Calculator

The 28/36 Rule: How Much House You Can Safely Afford

Lenders don't decide affordability by feel — they use ratios. The 28/36 rule is the most common one: keep housing costs under 28% of your gross income, and all debts under 36%. This calculator applies both limits at once and shows which one actually constrains your budget. For a related calculation, 10/1 ARM Calculator may also be useful.

What the Two Ratios Mean

The rule is really two limits working together, and lenders look at both.

The front-end ratio is your housing cost divided by gross monthly income. Under the rule it should stay at or below 28%. Housing cost here means the full payment — principal, interest, property taxes, homeowners insurance, and any HOA dues or mortgage insurance.

The back-end ratio is all your monthly debt — housing plus car loans, student loans, credit-card minimums, and other obligations — divided by gross income. It should stay at or below 36%.

The two numbers give the rule its name and its logic. The 28% keeps housing itself affordable; the 36% makes sure housing plus everything else still leaves room to live. A healthy borrower clears both.

How to Use This Calculator

1. 1

   Enter your gross monthly income

   Your total household income before taxes and deductions. If you're paid annually, divide by 12.

2. 2

   Enter your existing monthly debts

   Car payments, student loans, minimum credit-card payments, and other recurring debt — not including the new mortgage.

3. 3

   Add an expected mortgage rate

   The rate you'd likely qualify for, so the calculator can turn your housing budget into a loan amount.

4. 4

   Set the loan term

   Usually 30 or 15 years. This affects how large a loan your housing budget can support.

Amortization Calculator covers similar ground if that's what you're after.

How the Calculation Works

The calculator finds two ceilings. The 28% ceiling is simply your income times 0.28. The 36% ceiling is your income times 0.36, minus the debts you already pay — because those debts eat into the total-debt allowance before housing does.

It then uses whichever number is lower as your real housing budget, and converts that monthly figure into an estimated loan amount using standard mortgage math. Taking the lower of the two is the key step — it guarantees you satisfy both limits at once, rather than passing one while quietly breaching the other.

A Worked Example

Take a household earning $8,000 gross per month, with $500 in existing monthly debts, looking at a 30-year loan at 6.5%:

Here the 28% housing limit ($2,240) is lower than the 36% back-end room ($2,380 after debts), so it sets the budget — supporting a loan of roughly $374,000 at this rate and term.

A similar approach is used in APR Calculator.

When Each Limit Wins

The rule shifts depending on how much debt you already carry. The same $8,000 income tells a different story as debts grow:

Up to about $640 in existing debt, the 28% housing limit binds. Beyond that, the 36% total-debt limit takes over and your housing budget starts shrinking with every extra dollar of debt.

Where the Rule Comes From

The 28/36 rule isn't arbitrary. It grew out of decades of mortgage-lending experience about where borrowers tend to stay comfortable and where they start to struggle. Housing above roughly a quarter to a third of income leaves little room for the rest of life — food, transport, savings, emergencies.

The two-part structure exists because housing alone isn't the whole picture. A buyer with no other debt can safely devote more to housing than one already carrying a car loan and student loans. The back-end ratio captures that difference, which is why lenders look at both numbers rather than just the housing figure.

Real-World Uses

Buyers use the 28/36 rule to set a realistic price ceiling before house-hunting, so they don't fall for a home they can't sustainably afford. Seeing the number in advance also curbs the temptation to stretch when a lender approves more than is comfortable.

It also reveals the payoff of clearing other debt first. Once the 36% back-end limit is the binding one, every dollar of monthly debt you eliminate frees up roughly a dollar of housing budget — which can translate into tens of thousands of extra borrowing power. Paying off a $400 car loan before applying can meaningfully raise the home price you qualify for.

Renters can use it too, simply treating rent as the housing cost, to judge whether a lease fits their income without overcommitting.

Beyond the Rule: What Else Affects Affordability

The 28/36 rule sets a sensible ceiling, but a few things sit outside it. Your down payment changes the loan size and can remove mortgage insurance, lowering the monthly cost. Your credit score affects the rate you're offered, which changes how much loan a given budget supports. And local costs — property taxes and insurance vary widely by area — can consume a large slice of the 28% housing allowance before principal and interest are even counted.

A conservative buyer often aims below the limits rather than at them, leaving margin for rate changes, maintenance, and life's surprises. You'll find the same kind of logic in Back to School Calculator.

How Much Income for a Given Home

The rule also works in reverse, which is useful when you already have a target home in mind. If a home's full monthly housing cost would be $2,500, the 28% front-end limit implies you'd want gross monthly income of at least $2,500 ÷ 0.28 ≈ $8,930 — about $107,000 a year — before other debts are even considered.

Turning the rule around this way is a fast reality check: if the income the home requires is far above yours, that's a clear signal to look at a lower price range rather than stretch the ratios.

Understanding Your Result

The recommended housing budget is the maximum monthly housing payment that keeps you inside both limits. The 28% and 36% ceilings are shown separately so you can see the gap. The estimated loan amount translates that budget into a purchase-price ballpark at your rate and term.

Remember this budget covers the full housing payment — not just principal and interest, but taxes and insurance too. Leave room for those, or the true payment will breach the 28% line.

The estimated loan amount is a ceiling, not a target. Borrowing right up to it leaves no cushion; many buyers deliberately shop below it so a rate rise, a repair, or a change in income doesn't turn a comfortable payment into a stressful one.

A Closer Look at the Housing Payment

Because the 28% limit is measured against the full housing payment, it helps to know what that payment actually contains. On a typical mortgage it breaks into four parts, often called PITI: principal, interest, taxes, and insurance.

Principal and interest are the loan repayment itself. Property taxes and homeowners insurance are usually collected monthly into an escrow account and paid on your behalf. Where the down payment is under 20%, mortgage insurance is added on top, and a condo or planned community adds HOA dues. All of these count toward the 28% — which is why a payment that looks affordable on principal and interest alone can quietly cross the line once the rest is included.

Common Mistakes

• Using net income instead of gross. The rule is built on pre-tax income. Using take-home pay makes the limits look smaller than lenders apply.
• Forgetting taxes and insurance. Housing cost includes them. A payment that's exactly 28% on principal and interest alone will exceed 28% once escrow is added.
• Ignoring existing debt. The 36% back-end limit is where car loans and credit cards quietly reduce how much house you can afford.

This kind of mix-up comes up in Absolute Change Calculator too.

Accuracy & Limitations

The 28/36 rule is a widely used guideline, not a hard law. Some lenders approve higher ratios for borrowers with strong credit, large down payments, or significant savings; others are stricter.

This calculator gives a conservative, sustainable estimate. It doesn't account for your credit score, down payment, or region-specific costs, and it isn't a loan pre-approval. Treat it as a planning starting point, and confirm actual limits with a lender.

It also assumes your income is steady. For variable or commission-based income, lenders often average the last two years and may apply the ratios more cautiously — so build in extra margin if your earnings fluctuate.

Related Concepts

Debt-to-income ratio (DTI) is the broader term for the back-end 36% figure — total debt divided by gross income. PITI stands for the four parts of a housing payment: principal, interest, taxes, and insurance, which is exactly what the 28% limit is measured against. Pre-approval is a lender's formal estimate of what you can borrow, which uses these ratios along with your credit and assets. For other calculations, CLTV Calculator - Customer Lifetime Value is also available on the site.