Buying a home is one of the biggest financial decisions most people make, and knowing how much you can afford is crucial to making a smart and secure investment. One of the most trusted methods used by lenders and financial advisors to determine mortgage affordability is the 28/36 Rule.
28/36 Rule Calculator
🧮 What is the 28/36 Rule?
The 28/36 Rule is a lending guideline used to evaluate whether a borrower is financially capable of handling a mortgage. The rule is made up of two ratios:
- 28% – The maximum portion of your gross monthly income that should go toward housing expenses (mortgage, taxes, insurance).
- 36% – The maximum portion of your gross monthly income that should go toward total debt, including housing, credit cards, student loans, car loans, and other obligations.
Why it matters:
- It ensures borrowers don’t overextend themselves
- It’s commonly used by banks and lenders for loan approvals
- It encourages smart budgeting when shopping for a home
🛠️ How to Use the 28/36 Rule Calculator
This calculator is easy to use and designed to give you clarity in seconds.
Step-by-Step Instructions:
- Enter your gross monthly income (before taxes)
- Enter your total monthly debt payments (excluding housing if calculating housing-only affordability)
- Click “Calculate”
The output will show:
- ✅ Maximum housing budget (28% of income)
- ✅ Maximum total debt limit (36% of income)
- ✅ Remaining room in your debt-to-income ratio
- ✅ Whether your current obligations fall within the rule
📐 28/36 Rule Formulas (Plain Text)
1. Maximum Housing Expense:
Housing Limit = Gross Monthly Income × 0.28
Example:
$5,000 × 0.28 = $1,400 (maximum housing expenses)
2. Maximum Total Debt Expense:
Total Debt Limit = Gross Monthly Income × 0.36
Example:
$5,000 × 0.36 = $1,800 (all debt payments combined)
3. Remaining Available Debt Capacity:
Available Debt Room = Total Debt Limit − Other Monthly Debt
Example:
$1,800 − $500 (credit cards, loans) = $1,300 available for housing
🧪 Real-World Examples
Example 1: Middle-Income Household
- Gross Monthly Income: $6,000
- Current Non-Housing Debt: $700
Max Housing (28%): $1,680
Max Total Debt (36%): $2,160
Remaining for Housing: $2,160 − $700 = $1,460
Conclusion: You can afford a home with a monthly cost of $1,460 or less
Example 2: Low Income with High Debts
- Gross Income: $3,000
- Credit Cards + Auto Loan = $900
Max housing: $840
Total debt limit: $1,080
Remaining for mortgage: $180
→ Conclusion: May be over-extended for a mortgage at this time.
✅ Why Use a 28/36 Rule Calculator?
| Benefit | Description |
|---|---|
| ✅ Financial Clarity | Understand your borrowing limit instantly |
| ✅ Lender-Ready Numbers | Align with the same calculations used by banks |
| ✅ Avoid Over-Borrowing | Stay in a healthy debt range |
| ✅ Plan Long-Term | Budget effectively for future expenses |
| ✅ Quick Results | Just enter income and debt—instant answers |
🔍 What Counts Toward the 28% and 36% Limits?
Housing (28% max):
- Mortgage principal & interest
- Property taxes
- Homeowners insurance
- HOA dues (if any)
Total Debt (36% max):
- All housing expenses above
- Auto loan payments
- Student loan payments
- Credit card minimum payments
- Personal loans
🧰 Helpful Tips for Staying Within the 28/36 Rule
- 🏡 Lower your housing expectations if you’re at the edge of affordability
- 💳 Pay off credit cards or reduce debt before applying for a mortgage
- 🧾 Increase your income through side gigs or better employment
- 📉 Shop for better mortgage rates to reduce monthly housing costs
- 💼 Use the calculator before applying to avoid loan rejections
📖 20 Frequently Asked Questions (FAQs)
1. What is the 28/36 rule?
A guideline suggesting you spend no more than 28% of your income on housing and 36% on total debt.
2. Why is it important?
It ensures long-term financial health and helps lenders assess your borrowing ability.
3. Is it a legal limit?
No, it’s a financial best practice—not a law.
4. Can I exceed the 36% limit?
Some lenders allow it with excellent credit or large down payments, but it’s riskier.
5. What if I have no debt?
You may qualify for a larger mortgage, but 28% still applies to housing.
6. Does this calculator include property taxes?
Yes, housing expenses should include taxes and insurance.
7. Should I include utilities in housing expenses?
No, utilities are separate from the 28% rule.
8. Is the rule different for FHA loans?
Yes, FHA may allow up to 31%/43%.
9. What if my income is variable?
Use your average monthly income over 6–12 months.
10. How do I calculate debt-to-income ratio?
Total monthly debt ÷ gross monthly income × 100.
11. Can this be used for rental affordability?
Yes, renters can also benefit from staying within the 28/36 rule.
12. Do student loans count in debt?
Yes, even deferred loans may count depending on lender.
13. What’s the best DTI for getting approved?
Ideally under 36%, but under 43% is often accepted.
14. Can I use this calculator before a preapproval?
Yes, it helps you know how much home you can afford.
15. How does down payment affect the 28/36 rule?
A larger down payment may lower your monthly costs and improve affordability.
16. Should I use net or gross income?
Always use gross income (before taxes) for this rule.
17. Does this tool work for couples?
Yes, use combined monthly gross income and debts.
18. Is PMI (private mortgage insurance) included?
Yes, PMI should be counted in monthly housing costs.
19. What happens if I exceed the 28/36 limits?
You may struggle to get approved or face higher interest rates.
20. How often should I use this calculator?
Use it before pre-approval, refinancing, or anytime your financial situation changes.
🧠 Final Thoughts
The 28/36 Rule Calculator is a powerful yet simple tool that helps you make smarter decisions when buying or refinancing a home. By sticking to these proven affordability limits, you can maintain financial stability, improve your chances of mortgage approval, and avoid the common pitfalls of house-poor living.