How Much House Can I Afford? A Practical 28/36 Rule Guide

The 28/36 rule in plain language

A common planning guideline says housing costs should stay near or below 28% of gross monthly income (front-end), while total debt payments including housing should stay near or below 36% (back-end). Lenders may use different ratios, credit overlays, and residual income tests—but 28/36 remains a useful first filter before you fall in love with a listing.

Start with income and debts

Convert annual gross income to a monthly figure. List required monthly debts: car loans, student loans, minimum credit card payments, personal loans, and other installment obligations. Those debts shrink the room left under the 36% cap. High revolving balances often make the back-end ratio the binding limit even when the front-end looks fine.

Turn a payment budget into a home price

Once you know the maximum housing payment allowed by the tighter of the two rules, subtract estimated monthly taxes and insurance (and PMI if needed). What remains can support principal and interest. From rate and term, you can back into a loan amount, then add your down payment to estimate a purchase price.

Our affordability calculator does that sequence for you and shows which rule is binding. After you have a target price, refine the payment with the PITI mortgage calculator.

Levers that change the answer

• Paying down monthly debts raises the back-end budget.
• A larger down payment reduces the loan needed for the same price.
• Higher rates or taxes lower the affordable price for the same payment.
• A shorter term raises the payment and usually lowers the max price.

Comfort vs maximum

Qualifying for a payment is not the same as sleeping well with it. Leave margin for maintenance, utilities, childcare, and irregular costs. Many buyers intentionally shop below the calculator maximum so a rate change or tax reassessment does not break the budget.