The 28% Rule, Explained

The 28% rule says your housing payment should not exceed 28% of your gross monthly income. It is the single most quoted number in home buying, and for good reason — it is simple and it works.

Where it comes from

Lenders adopted the 28/36 standard decades ago: 28% of income for housing, 36% for all debt combined. These limits became the backbone of conventional mortgage underwriting.

How to apply it

Multiply your annual salary by 0.28, then divide by 12. That is your monthly housing budget. A $100,000 salary allows about $2,333 a month for PITI.

To work backwards from a payment to the income it needs, divide the monthly PITI by 0.28. Our calculator does this automatically and shows it under every result.

When 28% is too much

In high-tax states, on a lower income, or with big existing debts, 28% can leave too little for everything else. The rule is a ceiling, not a target. If you can stay at 20-25%, you will sleep better.

When 28% is too little

In expensive coastal cities, staying under 28% may price you out entirely. That is a signal about the market, not a reason to over-leverage.

See how your salary translates to a home price with our affordability calculator.