Two limits, two questions
Housing alone, and all debt together.
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The 28/36 affordability rule
A lender rule of thumb: housing up to 28% of gross income, all debt up to 36%. Your comfortable number may be lower.
In this lesson you will
- Apply the 28% and 36% limits
- Know what counts as housing cost
- Set a comfortable payment below the ceiling
The 28/36 rule is a common guideline for how much house you can afford. It says total housing costs should be no more than 28% of gross monthly income, and all monthly debt payments — housing plus car, student and card payments — no more than 36%.
What counts as housing
Housing usually means PITI: principal, interest, property taxes and insurance, plus HOA dues and PMI if they apply.
A lender’s ceiling, not your target
Lenders may approve more than 28/36 depending on the loan and your credit. That does not mean it is comfortable. Gross income ignores taxes, retirement contributions and childcare. Many households prefer a lower share so they can keep saving.
Remember what the rule leaves out
- Maintenance and repairs — often around 1% of the home’s value a year.
- Utilities, which are often higher in a house than an apartment.
- Furnishing and moving costs.
By the GetGuac team · Editorial policy
Three ideas to keep
Approval is not affordability
Lenders set ceilings.
Gross income flatters
Your take-home is smaller.
Do it in 4 steps
Find gross monthly income
Before tax.
Calculate both limits
× 0.28 and × 0.36.
Subtract other debts from 36%
For the real housing room.
Check against take-home budget
Including maintenance.
28/36 on $7,000 gross monthly income
Illustrative household with $450 of other monthly debt payments.
| Limit | Calculation | Amount |
|---|---|---|
| Housing (28%) | $7,000 × 0.28 | $1,960 |
| All debt (36%) | $7,000 × 0.36 | $2,520 |
| Room for housing under 36% | $2,520 − $450 | $2,070 |
| Lower of the two | $1,960 |
The 28% limit binds here: up to about $1,960 a month for PITI, before maintenance.
Where this usually goes wrong
- Treating lender approval as your budget
- Forgetting maintenance and utilities
- Leaving out car and student payments
Multiply your gross monthly income by 0.28 and by 0.36, then subtract your other debt payments from the second number.
Tools and guides for this lesson
Quick quiz
1. Under 28/36, housing should be at most…
2. Which is included in housing cost?
3. If a lender approves more than 28/36…
0 of 3 answered
Puzzle
Gross income $5,500 a month. Other debts $600 a month. What is the maximum housing payment under both limits?
Show the answer
$1,380
28%: $1,540. 36%: $1,980 − $600 = $1,380. The lower is $1,380.