28/36 Rule Calculator
Check if your housing and debt payments meet the 28/36 lending rule.
What this calculator does
This calculator applies the classic 28/36 underwriting rule to your finances. Enter your gross monthly income, your housing cost, and your total monthly debt payments, and it returns your front-end ratio against the 28 percent housing guideline, your back-end ratio against the 36 percent total debt guideline, and how much additional debt capacity remains.
The rule is deliberately conservative. It was built for manual underwriting in an era before automated systems, and modern lenders will approve well beyond it. That gap is the point: 28/36 tells you what leaves room in a budget, while lender limits tell you what a computer will tolerate, and those are different questions.
When to use it
Use it at the very start of house hunting, before a preapproval letter anchors your expectations upward. Working out the price that produces a 28 percent housing payment gives you a target that leaves room for retirement contributions, savings, and the repairs that follow ownership — none of which appear in an underwriting model.
It is also worth running the reverse test: take the preapproval amount a lender has offered, calculate the payment, and see what ratio it implies. If a lender has approved you at 44 percent back-end, the calculator shows exactly how much of your income that commits, and that comparison is often what stops a buyer from spending to the top of the approval.
Understanding the inputs
Gross monthly income is pre-tax pay, including bonus and commission a lender would average over two years. Using gross rather than take-home is what makes the rule feel tighter in practice than it sounds — 36 percent of gross can be close to half of net once taxes, FICA, and retirement contributions come out.
Monthly housing cost must be full PITI: principal, interest, property taxes, homeowners insurance, HOA dues, and any mortgage insurance. Total monthly debt is that housing figure plus car loans, student loans, credit card minimums, personal loans, and child support or alimony. Groceries, utilities, and insurance outside housing sit outside the rule.
How is this calculated?
Front-end ratio = Housing / Income. Back-end ratio = Total Debt / Income. Both should be within 28% and 36% respectively.
A worked example
Take $6,800 in gross monthly income. The 28 percent rule allows $1,904 for housing and the 36 percent rule allows $2,448 for all debt combined. With no other debts, the housing ceiling is $1,904.
Now add a $450 car payment and $250 in student loans. The back-end ceiling of $2,448 minus that $700 leaves only $1,748 for housing — $156 below what the front-end rule permitted. At around 6.5 percent over 30 years, and assuming taxes and insurance consume roughly a quarter of the payment, that difference is worth somewhere near $20,000 to $25,000 of purchase price. The car loan is setting the house budget.
Limitations and assumptions
The rule is a heuristic from a different era, and it ignores nearly everything about your circumstances: local cost of living, tax bracket, childcare, job security, household size, and whether you have savings behind you. A single earner at 30 percent may be far more exposed than a dual-income household at 38 percent.
It also does not reflect what lenders will actually approve, which is materially higher under current qualified mortgage and agency rules. And in high-cost markets the 28 percent figure is unreachable for most buyers. Use it as a sanity check on a budget and a reference point against a preapproval, not as a rule that must be satisfied.
Common Questions
- Where does the 28/36 rule come from?
- It is a conventional underwriting guideline that predates automated systems: housing costs no more than 28 percent of gross monthly income, total debt no more than 36 percent. Fannie Mae and Freddie Mac used it as a manual underwriting benchmark for decades, and it survives as a rule of thumb even though modern automated underwriting is more flexible.
- Do lenders still enforce 28/36?
- Not strictly. The qualified mortgage rule allows back-end DTI up to 43 percent, agency automated underwriting regularly approves 45 to 50 percent with compensating factors, and FHA works to roughly 31/43. So 28/36 is now a conservative personal benchmark rather than a hard approval threshold.
- What counts inside the 28 percent?
- The full PITI figure: principal, interest, property taxes, homeowners insurance, plus HOA dues and mortgage insurance where they apply. Not just the loan payment. Taxes and insurance commonly add 20 to 30 percent on top of principal and interest, which is why buyers who plan against the loan payment alone consistently overshoot.
- Which of the two limits usually binds?
- The 36 percent one, for anyone carrying a car payment or student loans. If you already have $700 a month of non-housing debt on a $6,800 income, the back-end rule leaves you $1,748 for housing — less than the $1,904 the 28 percent rule would allow. Existing debt quietly sets your housing budget.
- Should I borrow the maximum a lender approves?
- Rarely. Approval measures whether the payment is possible, not whether it is wise. The gap between a 28/36 budget and a 43 percent approval is often several hundred dollars a month, and that money would otherwise fund retirement contributions, an emergency fund, and the maintenance costs that arrive with ownership.
- Does the rule still work in expensive housing markets?
- Poorly, and that is a genuine criticism. In high-cost metros the median household cannot buy the median home at 28 percent, so buyers routinely stretch to 35 or 40 percent of gross on housing. The rule then becomes a measure of how much risk you are accepting rather than a limit you can meet.
- How does the rule apply to renters?
- The same 28 percent benchmark is a reasonable ceiling for rent, and many landlords apply a related test requiring gross annual income of at least 40 times the monthly rent, which works out near 30 percent. Renting has no property tax or maintenance exposure, so a renter at 28 percent has more genuine slack than an owner at 28 percent.
- How do I raise my housing budget without breaking the rule?
- Eliminate non-housing debt, which frees room under the 36 percent ceiling dollar for dollar. Increase your down payment to reduce the loan and remove mortgage insurance. Or raise documented income. Extending the loan term also lowers the payment, but it buys affordability with a much larger interest bill.
Related calculators
- Debt to Income Ratio CalculatorCalculate your debt-to-income ratio to assess loan affordability.
- Home Affordability CalculatorWork backward from your income and existing debts to the maximum home price and monthly payment you can realistically carry.
- Mortgage CalculatorCalculate your monthly mortgage payment, total interest paid, and full amortization schedule.