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

"How much house can I afford?" is the first question most buyers ask — and the answer is about more than what a lender will approve. The goal is a payment that fits your life, not just your application.

The 28/36 rule

Most lenders use the 28/36 rule as a starting point for your debt-to-income (DTI) ratio:

• The 28% front-end ratio: your total monthly housing payment (principal, interest, taxes, and insurance) should stay at or below 28% of your gross monthly income.
• The 36% back-end ratio: all of your monthly debt payments combined — housing plus car loans, student loans, and minimum credit-card payments — should stay at or below 36%.

Some loan programs allow higher ratios (FHA loans sometimes go to 43% or beyond), but staying near 28/36 keeps your budget comfortable and resilient.

A quick example

Say you earn $9,000 per month before taxes. The 28% guideline caps your housing payment at about $2,520, and the 36% guideline caps total debt at $3,240. If you already pay $600 toward a car and student loans, that leaves roughly $2,640 for housing — your effective ceiling is the lower of the two limits.

What the rule leaves out

Qualifying for a payment isn't the same as affording a home. Budget for the costs the DTI ratio ignores:

• Closing costs (typically 2–5% of the loan amount).
• Maintenance and repairs (a common rule of thumb is 1% of the home's value per year).
• Higher utility and insurance costs than you may be used to.
• An emergency fund so a surprise expense doesn't jeopardize your mortgage.

A good practice is to target a payment below your maximum so you keep breathing room. Our home affordability calculator works backward from your income, debts, and down payment to estimate a realistic price range, and you can pressure-test the monthly payment in the full mortgage calculator.