The 28/36 Rule: How Much of Your Income Should Go to Housing and Debt
When you apply for a mortgage, the lender looks hard at two percentages. You can work them out yourself in a couple of minutes, and they're useful even if you're not buying a house.
The two numbers
- 28%: your housing costs should be no more than 28% of your gross monthly income.
- 36%: your housing costs plus all your other debt payments should be no more than 36% of your gross monthly income.
"Gross" means before taxes and deductions, the top line on your pay stub.
What counts
Housing means the mortgage payment (or rent), property taxes, homeowners or renters insurance, and HOA dues.
Debt payments means the monthly payments on car loans, student loans, credit cards (the minimum) and personal loans.
Everyday spending like groceries, utilities and phone bills doesn't count toward either number.
An example
A household earning $6,000 a month before taxes:
| Guideline | Their limit | |
|---|---|---|
| Housing | 28% | $1,680 a month |
| Housing and debt payments | 36% | $2,160 a month |
If their mortgage, taxes and insurance come to $1,500, they're under 28%. If they also pay $450 on a car and $200 on credit cards, their total is $2,150, just under 36%.
These are guidelines, not laws
Different loans use different limits; some government-backed loans allow higher percentages. And the rule doesn't know about child care, a long commute or what you're saving.
Use the percentages as a warning light. Above 28% on housing, a rent increase or repair can squeeze everything else. Above 36% in total, there's not much room left for surprises.
If you're over
- Pay down the smallest debts. Clearing one entirely drops its payment out of the 36%.
- Don't add new monthly payments until the number comes down.
- Count all the household's income. If two of you earn and both pay the bills, both incomes belong in the gross.
See where you stand
IncomeSync's Insights compares your housing and debt payments with these two guidelines, using your household's actual paychecks, and shows what share of your take-home pay goes to bills and debt. As balances fall or pay goes up, the numbers update. Get IncomeSync.
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