Housing, Child Care, and Debt Costs Exceed 28/36 Rule for US Families

The established 28/36 rule suggests that households should allocate no more than 28% of their gross monthly income to housing expenses and no more than 36% to combined housing, child care, and debt payments. This guideline is intended to help families maintain financial stability. For a family earning the U.S. median monthly income of approximately $6,978, the housing expense limit would be about $1,954 per month. However, actual housing costs significantly exceed this threshold, with median mortgage payments around $2,844 and average rents about $2,095 per month. When factoring in child care, debt payments including student loans, credit cards, and auto loans, the recommended limit of 36% of gross income becomes even more restrictive. After housing expenses at the 28% level, only about $558 remains for child care and all debt obligations. Typical child care costs average $989 per month, while average debt payments can cumulatively push the total monthly financial burden far beyond recommended thresholds. For instance, combining mortgage payments, child care, and average debts results in monthly expenses totaling approximately $4,890, which is close to 70% of the average household income—nearly double the advised limit. Including additional debt factors such as a second vehicle's auto loan payment, a second student loan, and credit card balances can elevate obligations to roughly 88% of income. These figures highlight significant affordability challenges as housing and child care costs escalate faster than incomes. The 28/36 rule remains a useful benchmark for assessing financial stress, though many families currently exceed these limits, signaling increased financial vulnerability. This impacts lenders, insurers, and policymakers focusing on market stability and consumer credit risk management. Furthermore, rising housing and child care costs may influence insurance underwriting, claims risks, and regulatory policies aimed at protecting financially strained households. Industry professionals should consider these dynamics when designing products and advising clients. In summary, while the 28/36 rule serves as a sound financial guideline, current economic realities pose challenges to maintaining these standards, underscoring the need for vigilant financial planning and risk assessment within the insurance and housing markets.