28/36 Rule Calculator
This 28/36 rule calculator checks your budget against one of the oldest guidelines in home lending. The rule says your housing costs, meaning mortgage repayments plus rates and house insurance, should take no more than 28 percent of your gross monthly income, and your total debt repayments, housing plus car loans, student loan deductions, credit cards and buy now pay later commitments, should take no more than 36 percent. Enter your gross annual household income, your monthly housing costs and your other monthly debt repayments, and the calculator shows both ratios, the dollar limits the rule implies for your income, and a plain verdict on whether you pass. The housing share is known as the front-end ratio and the total debt share as the back-end ratio. NZ banks do not apply the 28/36 rule directly, they run their own servicing tests with buffered interest rates and the Reserve Bank's debt-to-income caps, but the rule remains a quick, honest self-check before you talk to a lender or commit to a bigger mortgage. If your numbers fail here, a bank servicing calculator will usually reach the same conclusion, so use the limits as an early warning rather than a target to spend up to.
You pass both tests: housing takes 26.0% of gross monthly income (limit 28%) and total debt repayments take 33.0% (limit 36%).
The 28/36 rule is a budgeting guideline, not a lending decision. NZ banks use their own servicing tests, buffered test rates and debt-to-income limits, so treat these figures as a self-check only.
How it works
The calculator divides your gross annual income by 12 to get gross monthly income. The front-end ratio is your monthly housing costs divided by gross monthly income, and the rule caps it at 28 percent. The back-end ratio adds every other monthly debt repayment to the housing figure and divides by the same income, with a cap of 36 percent. The dollar limits are simply 28 percent and 36 percent of your gross monthly income, so you can see how much room the rule leaves at your income level. Housing costs should include the full mortgage repayment plus rates and house insurance; other debt covers minimum credit card payments, car and personal loan repayments, student loan deductions and regular buy now pay later instalments.
Worked example
A household earns $120,000 a year, which is $10,000 of gross income a month. Their mortgage, rates and insurance come to $2,600 a month, so the front-end ratio is 2,600 / 10,000, which is 26.0%, inside the 28% limit of $2,800. They also pay $700 a month across a car loan and a credit card, taking total debt repayments to $3,300 and the back-end ratio to 33.0%, inside the 36% limit of $3,600. They pass both tests with $200 of monthly headroom on housing and $300 on total debt.
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- House Affordability Calculator: the house price your income supports.
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- Mortgage Repayment Calculator: repayments for any loan and rate.
- Rent Affordability Calculator: the same idea for renters.