What Percentage of Your Income Should Go to a Mortgage?

The most widely cited rule is 28% — your monthly mortgage payment should not exceed 28% of your gross monthly income. But that number was established decades ago, and today's housing market, interest rates, and cost of living make a one-size-fits-all percentage misleading for millions of American buyers.

The honest answer is that the right percentage depends on your total debt load, your state's property taxes, your job stability, and how much financial cushion you want to maintain. This guide walks through every major rule, when each applies, and how to calculate your specific number using your real income and debts.

For a state-by-state view of how income maps to home affordability, see our Housing Affordability by State report.

The 28% Rule: What It Means and Where It Comes From

The 28% rule — sometimes called the front-end ratio or housing ratio — states that your total monthly housing costs should not exceed 28% of your gross (pre-tax) monthly income.

Housing costs included in this 28%:

• Principal and interest on your mortgage
• Property taxes
• Homeowners insurance
• HOA fees (if applicable)
• PMI or MIP (if applicable)

This is your PITI — Principal, Interest, Taxes, and Insurance. Lenders calculate this number when deciding how much to lend you.

Example at different income levels:

Annual Income	Gross Monthly	28% Max Housing	Approx. Home Price
$50,000	$4,167	$1,167/mo	~$155,000
$70,000	$5,833	$1,633/mo	~$215,000
$80,000	$6,667	$1,867/mo	~$250,000
$100,000	$8,333	$2,333/mo	~$310,000
$120,000	$10,000	$2,800/mo	~$375,000
$150,000	$12,500	$3,500/mo	~$470,000

Estimates assume 6.5% rate, 30-year fixed, 10% down, average property taxes and insurance. Use our Mortgage Calculator to get your exact number.

The 36% Rule: Why Total Debt Matters More

The 28% rule only covers housing. The 36% rule — also called the back-end ratio or debt-to-income (DTI) ratio — says your total monthly debt payments should not exceed 36% of gross income. This includes your mortgage plus all other debts.

Total debts included in the 36%:

• Mortgage payment (PITI)
• Car loans
• Student loans
• Credit card minimum payments
• Personal loans
• Any other recurring debt obligations

Example with $80,000 income and $600/month in existing debts:

• Gross monthly income: $6,667
• 36% back-end limit: $2,400
• Existing debts: $600/month
• Available for mortgage: $1,800/month
• 28% front-end limit: $1,867
• Binding constraint: $1,800 (back-end ratio wins)

When you carry significant debt, the 36% back-end rule — not the 28% front-end rule — determines how much house you can actually afford. This is why paying down a car loan before applying for a mortgage can meaningfully increase your buying power.

What Lenders Actually Use in 2026

Most conventional lenders today allow a back-end DTI up to 43%–45%, not 36%. FHA loans can go up to 50% with compensating factors like strong credit or large reserves. The 28/36 rule is a guideline for buyers, not a hard lender limit.

Loan Type	Max Front-End DTI	Max Back-End DTI	Notes
Conventional	28%–36%	43%–45%	Fannie/Freddie guidelines
FHA	31%	43%–50%	More flexible with compensating factors
VA	No hard limit	41%	Residual income requirement applies
USDA	29%	41%	Rural/suburban properties only
Jumbo	28%–36%	43%	Varies by lender

Just because a lender will approve you at 45% DTI doesn't mean you should borrow that much. Lenders are optimizing for their risk — you need to optimize for your financial health and quality of life.

The Dave Ramsey Rule: 25% of Take-Home Pay

Dave Ramsey's recommendation is significantly more conservative than standard lending guidelines: keep your mortgage at or below 25% of your monthly take-home pay on a 15-year fixed mortgage.

Why this is different:

1. It uses take-home pay (after taxes), not gross income
2. It targets a 15-year mortgage, not 30-year
3. 25% is the ceiling, not the target

Example at $80,000 gross income:

• Estimated take-home (after ~25% taxes): $5,000/month
• 25% of $5,000 = $1,250/month
• On a 15-year fixed at 6.5%: roughly $155,000–$175,000 home

This is dramatically more conservative than lender maximums. Following Ramsey's rule on a median income in most US cities means either buying a modest home, saving a very large down payment, or waiting longer to buy.

The Ramsey rule makes sense if your priority is financial security and rapid wealth building. The standard 28/36 rule makes sense if you want to maximize your buying power while staying within responsible limits.

How Property Taxes Change the Real Percentage

Here's what most percentage-of-income guides miss: property taxes vary by 5x across states, which means the same mortgage payment consumes a completely different share of income depending on where you buy.

State	Avg Property Tax Rate	Annual Tax on $300k Home	Monthly Tax Cost
Hawaii	0.028%	$840	$70/mo
Alabama	0.041%	$1,230	$103/mo
Colorado	0.051%	$1,530	$128/mo
Florida	0.083%	$2,490	$208/mo
Georgia	0.081%	$2,430	$203/mo
Ohio	0.136%	$4,080	$340/mo
Texas	0.168%	$5,040	$420/mo
New Jersey	0.228%	$6,840	$570/mo
Illinois	0.208%	$6,240	$520/mo

A buyer in New Jersey paying $570/month in property taxes on a $300,000 home is spending 30% more of their housing budget on taxes than a buyer in Georgia paying $203/month — before a single dollar of principal or interest is counted.

This is why the percentage-of-income rule must always be applied to your full PITI payment, not just your mortgage payment. Use our Mortgage Calculator to see your full PITI by state.

What Percentage Actually Works: A Practical Framework

Rather than picking one number, use this tiered framework based on your financial situation:

20–25% of gross income: Conservative (recommended for most)
Best for: single income households, variable income (freelancers, commission), people with high existing debts, those prioritizing retirement savings and emergency funds. Leaves maximum financial flexibility.

25–28% of gross income: Standard (the guideline)
Best for: dual income households with stable employment, moderate existing debts, adequate emergency savings. This is where most financially healthy buyers land.

28–36% of gross income: Aggressive (proceed carefully)
Best for: buyers with zero other debt, strong job security, high income trajectory, or significant liquid assets. Doable but leaves little room for error.

Above 36%: High risk
Lenders may approve this with FHA or compensating factors, but you are one job loss or major repair away from financial stress. Only consider this with exceptional circumstances.

The Real Question: Gross vs Take-Home Income

Every rule above uses gross income (before taxes). But you don't live on gross income — you live on take-home pay. Here's why this matters:

On a $100,000 salary:

• Gross monthly: $8,333
• 28% of gross = $2,333/month mortgage budget
• Actual take-home (after federal/state taxes, FICA): ~$6,200–$6,800
• $2,333 as % of take-home: 34%–38%

If you're budgeting 28% of gross, you're actually spending 34–38% of the money you actually receive. This is why many buyers who qualify for a mortgage on paper still feel financially stretched — the gross income rule flatters the math.

A more realistic approach: calculate 28% of gross for lender qualification purposes, but also run the number against your actual take-home to make sure it feels manageable day-to-day.

How to Calculate Your Number

Here's a simple 4-step process:

Step 1: Calculate your gross monthly income
Annual salary ÷ 12. For variable income, use a 2-year average.

Step 2: Apply the 28% front-end limit
Gross monthly × 0.28 = maximum PITI payment

Step 3: Subtract your existing monthly debts from the 36% limit
Gross monthly × 0.36 = total debt allowance
Total debt allowance − existing debts = mortgage budget

Step 4: Use the lower of Step 2 and Step 3
This is your realistic maximum monthly payment. Use our Affordability Calculator to convert this to a home price based on your state, down payment, and current rates.

Signs You're Spending Too Much on Housing

Even if you qualify, watch for these warning signs that your mortgage percentage is too high:

• You have less than 3 months of expenses in emergency savings after closing
• You can't max your 401(k) match at your employer
• A single unexpected expense ($3,000 car repair, medical bill) would require credit card debt
• You have no discretionary income for home maintenance after paying PITI
• You relied on a bonus or overtime to qualify — income that isn't guaranteed

If any of these apply, consider buying below your maximum approval, making a larger down payment to reduce the monthly payment, or waiting until your income or savings improve.

All figures use current rate estimates and average costs. Rates and tax rates change. Consult a licensed mortgage professional and tax advisor for advice specific to your situation. Data sourced from the Consumer Financial Protection Bureau, Federal Reserve, and Tax Foundation.

Frequently Asked Questions

What percentage of income should go to a mortgage?

The standard guideline is 28% of gross monthly income for your total housing payment (PITI — principal, interest, taxes, and insurance). Most lenders will approve up to 43%–45% back-end DTI including all debts. A more conservative approach is 25% of take-home pay, as recommended by financial experts like Dave Ramsey. The right number depends on your total debt load, job stability, and financial goals.

Is 30% of gross income too much for a mortgage?

Thirty percent of gross income is slightly above the traditional 28% guideline but within the range most conventional lenders will approve. Whether it's too much depends on your other debts, savings, and income stability. If you have no other debt and a stable income, 30% is manageable for many buyers. If you carry car loans or student debt, 30% of gross may leave you financially stretched after accounting for all obligations.

Should I use gross or net income to calculate my mortgage percentage?

Lenders use gross income (before taxes) to calculate your DTI ratio for qualification. But for personal budgeting, you should also check the payment against your net take-home pay. A payment that is 28% of gross income typically represents 34%–38% of actual take-home pay after taxes — which is a meaningful distinction for day-to-day budgeting.

What is the 28/36 rule for mortgages?

The 28/36 rule states that your monthly housing costs should not exceed 28% of gross income (front-end ratio), and your total monthly debt payments — including housing — should not exceed 36% of gross income (back-end ratio). When you have existing debts like car loans or student loans, the 36% back-end limit often becomes the binding constraint that determines how much house you can afford.