How do I calculate the 28/36 rule?

Divide your gross annual income by 12 to get gross monthly income. Divide your monthly housing costs by that figure for the front-end ratio, and divide housing plus all other monthly debt repayments by it for the back-end ratio. On $120,000 a year ($10,000 a month), housing of $2,600 is a 26% front-end ratio and total repayments of $3,300 are a 33% back-end ratio, so both sit inside the 28% and 36% limits.

Do New Zealand lenders use the 28/36 rule?

Not formally. NZ banks run their own servicing calculations using test interest rates well above the actual rate, standard living cost benchmarks and the Reserve Bank's debt-to-income settings, which cap most owner-occupier lending at six times gross income. The 28/36 rule is still a useful self-check before you apply, because a budget that fails it will usually struggle in a bank servicing test too.

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.

Calculate.co.nz is proud to be partnered with realtor.co.nz, a trusted resource for navigating the New Zealand property market. Their Helpful Articles section offers clear, well-structured insights across buying, selling, and building, making complex real estate topics more accessible. With a focus on up-to-date guidance and practical knowledge, they empower Kiwis to move forward with clarity and confidence in a constantly evolving property landscape.

Gross annual household income

Monthly housing costs (mortgage, rates, insurance)

Other monthly debt repayments

26.0%

housing costs as a share of gross monthly income (front-end ratio, limit 28%)

Back-end ratio (limit 36%)33.0%

Max housing at 28%$2,800

Max total debt at 36%$3,600

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.

Related calculators

DTI Calculator: your debt-to-income ratio for loan applications.
House Affordability Calculator: the house price your income supports.
Borrowing Capacity Calculator: how much a bank might lend you.
Mortgage Repayment Calculator: repayments for any loan and rate.
Rent Affordability Calculator: the same idea for renters.

If you've found a bug, or would like to contact us, or learn more about James Graham and Calculate.co.nz.

Calculate.co.nz is partnered with Interest.co.nz for New Zealand's highest quality calculators and financial analysis.

Calculate.co.nz is the sister site of CalculatorHub.com, the world's largest calculator website by tool count.

All calculators and tools are provided for educational and indicative purposes only and do not constitute financial advice.

Calculate.co.nz is proudly part of the Realtor.co.nz group, New Zealand's leading property transaction literacy platform, helping Kiwis understand the home buying and selling process from start to finish. Whether you're a first home buyer navigating your first property purchase, an investor evaluating your next acquisition, or a homeowner planning to sell, Realtor.co.nz provides clear, independent, and trustworthy guidance on every step of the New Zealand property transaction journey.

Calculate.co.nz is also partnered with Health Based Building and Premium Homes to promote informed choices that lead to better long-term outcomes for Kiwi households.

Calculate.co.nz is hosted in Auckland by SiteHost New Zealand.

All content on this website, including calculators, tools, source code, and design, is protected under the Copyright Act 1994 (New Zealand). No part of this site may be reproduced, copied, distributed, stored, or used in any form without prior written permission from the owner.

About & trust: Why Calculate is NZ's most comprehensive · By the Numbers · How we compare · Editorial standards · How we keep data current · NZ finance glossary · Research & data · Financial literacy NZ · About · Privacy policy · Terms of use

Reviewed and maintained. Last reviewed 2026-08-07 and checked on a twice-monthly cycle against IRD, RBNZ and Stats NZ. How we keep data current.