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📂 Category: Budgeting,Budgeting & Savings,Personal Finance
✅ Key idea:
Key takeaways
- The 28/36 rule states that no more than 28% of your total household income should go toward housing, and no more than 36% of your total household income should go toward housing, child care costs, and all debts.
- Child care costs an average of $989 per month, while the average mortgage rate is $2,127 per month.
- Childcare and mortgage costs account for about 45% of median household income ($6,977.50), well above the 28/36 rule of thumb.
As costs continue to rise, determining how much of your income should go to pay for housing versus child care can be difficult.
One rule of thumb is that no more than 28% of your gross income should go toward housing, and no more than 36% toward housing plus all your debts, plus child care costs. But can most families achieve this?
How much should you spend on housing?
For many people, housing costs are their largest monthly expense, but you may be wondering if you’re paying too much based on your income.
The 28/36 rule can help you determine if you’re overspending on housing. Mortgage lenders and financial experts recommend spending no more than 28% of your gross monthly income on housing, and no more than 36% of your monthly income on housing, childcare and debt.
For example, if your household makes $6,977.50 per month before taxes (average U.S. income divided by 12), you should spend no more than 28% of that, or $1,953.70, on housing per month.
However, the mortgage for a median-priced home with an interest rate of 6.36% with a 10% down payment costs $2,844 per month, and renters pay an average of $2,095 per month.
$439,701
The average cost of a home in the United States as of October 2025 was $439,701.
Consider the costs of caring for your child
Under the 28/36 rule, no more than 36% of your gross income should go toward housing, child care, and debt. If we use our previous example—that is, your household makes $6,977.50 per month—no more than $2,511.90 of your monthly income should go toward housing, child care, and debt, such as student loan payments, credit card bills, and car loans.
It seems easy to follow the 28/36 rule until you realize how high child care costs are in the United States. Here’s what families typically pay.
| 2025 child care costs | |||
|---|---|---|---|
| Average cost of infant care per month | Average cost of child care per month | The percentage of income spent on infant care costs each month | The percentage of income spent on child care costs each month |
| $1,233 | $989 | 14.38% | 11.61% |
Factoring in other debts
Let’s use our previous example of a monthly household income of $6,977.50. If we subtract the maximum allowable housing expenses ($1,953.70, or 28%) from 36% ($2,511.90), you’ll be left with just $558.20 per month to cover childcare, credit card bills, car loans, student loans, and any other debt. That’s not a lot to work with.
If you pay an average mortgage of $2,844 per month, average child care costs $989 per month, average auto loan costs for a used car $521 per month, and average student loan costs of $536 per month, your housing, child care, and debt costs would be $4,890, which is over 70% of average income — far more than the recommended 36%.
Also keep in mind that many families have two cars, two student loan payments, plus credit card debt (the average is $181 per month). If you add these costs, the costs that were supposed to not exceed 36% amount to 88%.
No wonder so many Americans are suffering.
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