Mortgages: 28/36, PMI, and Rate Math

A mortgage is likely the largest number you'll ever sign. A single percentage point on it moves more money than most people save in a decade of skipped coffee.

Last verified 2026-07-16

What lenders check, and what the payment really contains

The 28/36 rule is an underwriting guideline, not a law: housing costs under 28% of gross monthly income, and total debt payments under 36%. Lenders vary, but it's the reference point.

The number it applies to is PITI — principal, interest, taxes, and insurance — not just the loan payment. Property tax and homeowners insurance can add hundreds a month, and leaving them out is how a house that looks affordable stops being affordable.

PMI is private mortgage insurance, typically required on conventional loans with less than 20% down. Two facts about it are widely misunderstood: it protects the lender, not you, and it isn't permanent — you can request cancellation at 20% equity, and it must terminate automatically at 22% under the Homeowners Protection Act.

One percentage point, thirty years

As of July 9, 2026 the 30-year fixed averaged 6.49% per Freddie Mac's survey. On a $400,000 loan that's roughly $2,525 a month in principal and interest; at one point higher it's about $2,795.

That's a difference of around $270 a month — and well over $90,000 across the full thirty years.

It's worth sitting with the scale of that. A single percentage point on a mortgage moves more money than most people save through a decade of careful spending decisions. Shopping the rate is not a detail; it's the highest-leverage hour in the entire process.