What the 28/36 rule says
The rule has two parts. The first number, 28%, is the share of your gross monthly income that goes to housing. The second number, 36%, is the share that goes to all your debts together, including the housing payment.
Gross income means your pay before taxes and other deductions. Because take-home pay is lower, the rule is a starting point, not a full budget.
What counts as housing
The 28% figure covers your full monthly housing payment, not just the loan. That usually includes:
- Principal and interest on the mortgage
- Property taxes
- Homeowners insurance
- Mortgage insurance, if your loan has it
- HOA or condo dues, if you have them
What counts as debt
The 36% figure adds your other monthly debt payments to your housing payment. Lenders usually count the minimum payments that show on your credit report, plus some other obligations.
- Car loans and leases
- Student loans
- Minimum credit card payments
- Personal loans
- Child support or alimony you pay
Two examples
These are simple illustrations using gross monthly income.
- $8,000 a month: up to $2,240 for housing (28%) and $2,880 for all debts (36%). If your other debts are $640 a month, the two limits line up.
- $9,000 a month: up to $2,520 for housing and $3,240 for all debts. If your car and student loans already total $900, the 36% limit leaves $2,340 for housing, less than the 28% figure.
How lenders really use it
Lenders look at your debt-to-income ratio, or DTI: your monthly debts, including the new house payment, compared with your gross monthly income. Many loan programs allow a higher total than 36%. At CapCenter, your DTI can be up to 50%.
Approval also depends on your credit, savings, down payment and the loan program. A higher ratio can be approved, but it leaves less room for savings, repairs and surprises.
When to aim lower
Being approved for a payment doesn't mean it fits your life. Consider staying under 28/36, or even lower, if:
- You have little savings left after closing
- Your income varies from month to month
- You expect big costs soon, like childcare or a new car
- You're also saving for retirement or college
- The home is older and may need repairs
How to run your numbers
Start with your gross monthly income and multiply by 0.28 and 0.36. Then add up your current monthly debt payments. Subtract that total from the 36% figure. The smaller of the two results is a comfortable housing payment under this rule. From there, a pre-approval shows what you qualify for and what your payment would be.
