How Much House Can I Afford? The 28/36 Rule Explained

Published October 11, 2026

Free tool: Home Affordability Calculator→

The price you can afford depends less on the house than on your monthly budget: your income, your other debts, the interest rate and the costs that come with owning a home. Lenders use a pair of simple ratios, often called the 28/36 rule, to decide how big a payment you can carry. This guide explains the rule, works through an example and shows what moves the answer. You can try your own numbers in the free Home Affordability Calculator.

The 28/36 rule

Lenders compare your monthly debts with your gross monthly income (before tax), using two debt-to-income ratios:

• Front-end (housing) ratio: 28%. Your total housing payment should be no more than 28% of your gross monthly income. That payment includes principal and interest, property tax, homeowners insurance, and any PMI and HOA fees.
• Back-end (total debt) ratio: 36%. Your housing payment plus all your other monthly debt payments, such as car loans, student loans and minimum credit card payments, should be no more than 36% of your gross monthly income.

Your maximum housing payment is whichever limit is lower. Many lenders approve higher ratios, sometimes 43% to 50% total debt depending on the loan program and your credit, but being approved for a bigger loan doesn't mean the payment will be comfortable.

Worked example

Suppose you earn $100,000 a year, pay $500 a month on a car loan, and have $60,000 for a down payment. Rates are 6.5% for a 30-year loan, property tax is 1.1% of the home's value a year, insurance costs $1,500 a year and PMI would be 0.6% of the loan.

1. Monthly income: $100,000 ÷ 12 = $8,333.33
2. Front-end limit: 28% × $8,333.33 = $2,333.33
3. Back-end limit: 36% × $8,333.33 − $500 of other debts = $2,500.00
4. Your housing budget is the lower figure: $2,333.33 a month. Here the housing ratio is the limit.
5. Find the price whose full monthly cost fits that budget. The calculator solves this for you: about $338,300.

Here is what the monthly payment on a $338,304 home looks like:

The total uses exactly 28% of income, and with the car loan, total debt comes to 34%, inside the 36% limit. On top of the down payment, you'd need about $10,150 for closing costs (3% of the price), so the cash to close is about $70,150.

What changes how much you can afford

Your other debts. If the car payment were $1,000 instead of $500, the back-end ratio would become the limit, leaving $2,000 a month for housing. The maximum price drops to $300,000, the point where $60,000 is exactly 20% down: any higher, and PMI would push the payment over the limit.

The interest rate. With everything else as in the example:

Each point on the rate changes your budget by roughly $22,000 to $25,000 of house.

Your down payment. With $100,000 down instead of $60,000, the maximum price rises to $392,464, and because that's over 20% down, there's no PMI. The Down Payment Calculator shows how long it takes to save each amount.

Property taxes and HOA fees. These come out of the same monthly budget as the loan. An HOA fee of $300 a month would lower the maximum price in the example to $300,000.

How to use the Home Affordability Calculator

1. Open the Home Affordability Calculator.
2. Enter your annual gross income and your monthly debt payments (car, student loans, credit card minimums, other loans; not rent or utilities).
3. Enter your down payment, the interest rate and the loan term.
4. Add the ownership costs: the property tax rate, home insurance per year, HOA fees and the PMI rate.
5. Keep or change the ratios. The defaults are 28% and 36%; lower them if you want more breathing room.
6. Read the results: the maximum home price, the loan amount, the monthly payment broken into its parts, the cash needed at closing, and meters showing your housing and total debt ratios against their limits. The calculator also tells you which ratio is holding you back.

Affordable isn't the same as comfortable

The 28/36 rule is a lender's guideline, not a household budget. Before you settle on a price, consider:

• Maintenance and repairs. A common rule of thumb is to set aside 1% to 2% of the home's value each year.
• Your emergency fund. Try not to spend every dollar of savings on the down payment and closing costs; the Emergency Fund Calculator suggests a cushion.
• Your other goals, such as retirement savings, childcare or travel.
• Whether buying beats renting where you live. The Rent vs Buy Calculator compares the two over time.

Frequently asked questions

What is the 28/36 rule?

It's a guideline that your housing costs should take no more than 28% of your gross monthly income, and all your debts, including housing, no more than 36%. Your affordable payment is the lower of the two limits.

Should I use my gross or take-home income?

Lenders use gross income, before tax, and so does the calculator. If you want a more conservative answer, lower the ratios or check the payment against your take-home pay in a budget.

How much house can I afford on $100,000 a year?

With $500 of other monthly debts, $60,000 down, a 6.5% rate and typical taxes and insurance, about $338,000 under the 28/36 rule. Your answer depends heavily on your debts, down payment and the rate, so put in your own numbers. The Debt-to-Income Ratio Calculator checks your current ratios.