Mortgage Payment to Income: 28% of Gross, 25% of Take-Home, and HUD's 30%
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The usual answer is 28% of gross monthly income, counting the whole housing payment: principal, interest, property tax, and insurance. On a $75,000 salary that is $1,750 a month. Three other figures circulate alongside it, and they measure different things. The 28% is a share of pay before tax. A rule of 25% of take-home pay is far stricter. And HUD's 30% threshold includes utilities, which lenders leave out. This article puts all three on the same salary so they can be compared directly.
Where does the 28% rule come from?
It is the front-end half of the 28/36 guideline lenders have long used. The front-end ratio compares the monthly housing payment with gross monthly income. The back-end ratio adds every other debt payment and keeps the total under 36%. On $6,250 a month, the $75,000 salary divided by twelve, those limits are $1,750 for housing and $2,250 for all debts. That leaves $500 for a car loan, student loans, and card minimums before the back-end limit binds. Neither figure is a legal limit, so the rule describes a comfortable payment rather than a lending ceiling. The debt-to-income guide covers how far lenders stretch past it.
What is 28% of gross as a share of take-home pay?
Gross pay is not what arrives in the bank. After federal and state income tax and payroll taxes, take-home pay might be around 75% of gross for a single earner on this salary, though the real share depends on the state, filing status, and retirement contributions. At 75%, the $6,250 becomes $4,687.50 a month. The same $1,750 payment is then 37.3% of take-home pay. At an 80% take-home share it is 35%. So a payment that sits exactly on the lender's guideline takes more than a third of each paycheck in either case.
How does 25% of take-home pay compare?
Some budgeting guides use 25% of take-home pay as the cap instead. Converting back to gross shows how much stricter that is. At a 75% take-home share, 25% of take-home equals 18.75% of gross. On the $75,000 salary it allows $1,171.88 a month, about $578 less than the 28% rule. At an 80% share it equals 20% of gross, or $1,250 a month. The two rules are not rivals so much as different questions: the 28% figure reflects what lenders have treated as sustainable, while the take-home version leaves room for saving and irregular costs.
Why is HUD's 30% threshold different?
HUD uses 30% for a different purpose. Its CHAS housing data defines cost burden as "monthly housing costs (including utilities) exceeding 30% of monthly income", with severe cost burden above 50%. That is a statistical measure of housing strain, not a lending test. The utilities are the key difference. On $6,250 a month, 30% is $1,875, only $125 more than the lender's 28%. A household paying exactly $1,750 for the mortgage crosses HUD's line once electricity, gas, water, and similar bills top $125 a month. With $300 of utilities, total housing costs reach $2,050, which is 32.8% of gross income.
How does the rate change the share for the same house?
Take a $312,500 home bought with 20% down, so a $250,000 loan over 30 years with no mortgage insurance, and allow $400 a month for property tax and insurance. The table shows the full payment as a share of the same $6,250 monthly income at five rates.
| Rate | Principal and interest | Full payment | Share of gross |
|---|---|---|---|
| 5.5% | $1,419 | $1,819 | 29.1% |
| 6.0% | $1,499 | $1,899 | 30.4% |
| 6.5% | $1,580 | $1,980 | 31.7% |
| 7.0% | $1,663 | $2,063 | 33.0% |
| 7.5% | $1,748 | $2,148 | 34.4% |
Each half-point adds between $79 and $85 a month and moves the share by about 1.3 points. Even at 5.5% this house is just over the 28% guideline on a $75,000 salary. The range is a sensitivity check on the arithmetic, not a forecast of where rates will go. Other combinations of price, deposit, and rate can be tried in the mortgage calculator.
If you are still working out a comfortable payment
The three percentages answer different questions, so it helps to know which one a figure refers to. A lender's 28% is measured on gross pay and excludes utilities. A take-home rule is measured on the paycheck. HUD's 30% includes the bills that come with the house. The affordability calculator turns any of these ratios into a price range. For a fixed loan size, the income needed for a $300,000 to $600,000 mortgage works in the other direction.