Dave Ramsey's 25% house rule calculator
Reverse a 15-year mortgage from Ramsey's 25% take-home-pay ceiling after taxes, insurance, HOA, and PMI.
Dave Ramsey Reviewed Aug 6, 2026 Rule located in Ramsey Solutions, 2026 Portrait: Gage Skidmore, CC BY-SA 3.0, via Wikimedia Commons. Self-hosted by JMM.
Put your numbers through the rule
The source establishes the rule. The values below belong to you, and the output is JMM's deterministic calculation.
Every field recalculates immediately. Changed values can be copied into a shareable URL.
- All-in monthly ceiling
- $1,800
- Maximum loan
- $113,130
- Estimated closing cash
- $6,094
The loan is solved over 180 monthly payments at the rate you entered.
Cash at purchase
- Down payment
- $90,000
- Closing-cost scenario
- $6,094
- Total modeled cash
- $96,094
What the source says, and what the calculator adds
Source-supported ruleThe guideline caps principal, interest, property tax, insurance, PMI, and HOA together at 25% of monthly take-home pay and uses a 15-year fixed mortgage. 
JMM calculationJMM subtracts the entered non-mortgage costs and inverts the amortization formula to estimate the loan and purchase price. 
What changes the answer
Non-mortgage costs consume the same ceiling
A higher tax bill or HOA fee lowers the principal-and-interest payment available under the rule, even when the mortgage rate is unchanged.
A shorter term sharply changes purchasing power
The cited rule uses 15 years. A 30-year approval amount would answer a different question and is intentionally not substituted.
Deliberately stricter than your lender, and the 15-year term does more of the work than the 25%.
This rule will hand you a number far below what a bank will approve, and that is the entire point: the lender is underwriting your ability to keep paying, not your ability to have a life. Two design choices do the real work. Taking the ceiling from take-home rather than gross quietly removes 20 to 30% of the budget, and folding tax, insurance, HOA and PMI inside the same 25% stops the payment from being the only cost you look at. The 15-year term is the harsher constraint and the more valuable one. If the answer this page gives you is uncomfortable in an expensive metro, that is information about the metro, not a fault in the rule.
Not the calculator’s limits. The rule’s.
It cannot bend for a genuinely growing income
The rule reads today’s take-home as permanent. A resident two years from attending, or a founder with vesting equity, gets an answer sized to a salary they will not have for long, and the rule offers no way to say so.
It compares the payment with rent that is rising
Twenty-five percent of take-home for a fixed 15-year payment is a very different commitment from 25% for rent that reprices every year. The rule scores the mortgage in isolation and never asks what the alternative costs over the same period.
What this model does not know
- This is a Ramsey guideline, not lender underwriting or an affordability guarantee.
- Every rate and local cost is user-entered.
- Maintenance, utilities, transaction taxes, and future changes in tax or insurance are excluded.
Before you use the result
Does a bank use this 25% rule?
Not necessarily. Lenders use their own debt, income, credit, and property standards.
Why is the result below many online affordability calculators?
The cited rule uses take-home pay, an all-in ceiling, and a 15-year term.
The next question this page cannot answer
-
Calculator Mortgage calculator The same loan without the 25% ceiling, so the rule can be compared with what the payment on any given price would be.
Open → - Guide Rent versus buy is not payment versus payment
The comparison this rule leaves out. It scores the mortgage alone and never asks what renting the same house costs over the same years.
Open → -
Dave Ramsey, sourced rule Mortgage payoff calculator What happens after the purchase, from the same publisher: the early-payoff step this rule’s 15-year term is built to reach.
Open →