How Much House Can You Afford? The 28/36 Rule Explained
Updated 2026-06-03 · FinCalc Hub Editorial
Before you fall in love with a listing, it helps to know your real budget. Lenders don't just look at your salary — they use debt ratios to decide what you can borrow. Here's how it works.
The 28/36 rule
The classic guideline is the 28/36 rule. Your monthly housing payment should stay under 28% of your gross monthly income (the front-end ratio), and all your debt payments combined should stay under 36% (the back-end ratio).
For example, on a $100,000 salary (about $8,333/month), that's roughly $2,333 for housing and $3,000 for total debt. Try your own numbers in the home affordability calculator.
Why your other debts matter
Car loans, student loans, and minimum credit card payments all count toward your 36% limit. The more you owe elsewhere, the less room there is for a mortgage.
This is why paying down a car loan or credit card before applying can meaningfully increase the home price you qualify for.
Down payment and the full picture
A larger down payment reduces your loan and monthly payment, and a 20% down payment avoids private mortgage insurance (PMI). But don't drain your emergency fund — lenders also like to see cash reserves.
Remember the payment includes property taxes and insurance, not just principal and interest. Build those in when estimating affordability.
Try the related calculators
FAQ
- Can I get approved above 36% DTI?
- Yes — some loan programs allow higher DTI with strong credit, reserves, or a large down payment, but it adds risk to your budget.
- Does the rule include taxes and insurance?
- Yes. The 28% front-end ratio covers your full housing payment: principal, interest, taxes, and insurance.