Rule of thumb · FinanceNº 62 / 167

28/36 for housing debt

Keep housing costs under 28% of gross income, and all debt payments under 36%.

Why it works

The classic mortgage-qualification ratios lenders use. Above them, one bad month starts to cascade.

When it fails

It is a US underwriting convention on gross income, so it travels badly to countries with much higher tax and social contributions — 28% of gross can be 45% of take-home. It also ignores childcare and commuting, either of which can dwarf the difference between 28% and 36%.

Do it exactly

Estimate with the rule, then check it against the calculator that models it properly.

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How much of your income should go on housing?

Keep housing costs under 28% of gross income, and all debt payments under 36%. The classic mortgage-qualification ratios lenders use.

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