Budget Calculator · Practical guide
What Percentage of Income Should Go to Housing?
The classic guideline caps housing at 30% of income — around $1,500 a month on a $5,000 take-home.
At a glance
The 30% Rule
The long-standing guideline is to keep housing at or below 30% of your income. Mortgage lenders often use an even tighter 28% of gross income for the loan payment itself. Working from take-home pay keeps the rule practical: on $5,000 a month net, 30% means a housing cap of $1,500. Enter your income and housing cost above to see your actual percentage in the spending breakdown.
Interactive tool
Budget Calculator
Enter your own values, then compare the result with the examples below.
Budget Summary
Spending Breakdown
Housing Limits at Common Incomes
| Monthly Take-Home | 25% (Comfortable) | 30% (Guideline) | 35% (Stretched) |
|---|---|---|---|
| $3,500 | $875 | $1,050 | $1,225 |
| $5,000 | $1,250 | $1,500 | $1,750 |
| $6,500 | $1,625 | $1,950 | $2,275 |
| $8,000 | $2,000 | $2,400 | $2,800 |
What Counts as Housing
For renters, housing is rent plus renter's insurance and any required parking or amenity fees. For owners, it is the full PITI — principal, interest, property taxes, and homeowner's insurance — plus HOA dues. Utilities are often counted separately, which is why the calculator lists them as their own category; if you prefer the stricter version of the rule, add utilities to housing and compare the sum against 30%.
When You Are Over the Line
In expensive metros, 30% is not always achievable, and plenty of households run at 35–40%. The trade-off has to come from somewhere: typically wants first, savings second, which is why being over on housing quietly stalls financial goals. The budget breakdown shows which categories absorb the squeeze. If housing is crowding out savings entirely, the durable fixes are structural — a cheaper place, a roommate, or a higher income — not smaller restaurant tabs.
Frequently Asked Questions
Is the 30% rule based on gross or net income?
The original rule uses gross income, but budgeting from net (take-home) pay is more practical since that is what you can actually spend. Lenders qualifying you for a mortgage will use gross.
Do utilities count toward the 30%?
The strict version of the rule includes them; the looser version counts only rent or the mortgage payment. Pick one convention and apply it consistently when comparing your numbers.
What if housing takes 40% of my income?
You are cost-burdened by the standard definition, but not doomed — it means wants and savings must shrink to compensate. Track the trade-off explicitly so savings does not silently drop to zero.
Does the rule change for homeowners vs renters?
The 30% target applies to both, but owners should include taxes, insurance, HOA dues, and a maintenance reserve in their housing figure, not just the mortgage payment.