How Much House Can I Afford? The 28/36 Rule Explained
Use the 28/36 rule to estimate how much house you can afford based on income, debts, down payment, and rate — with a worked example and price table.
"How much house can I afford?" has one honest answer: it depends less on what a lender will approve you for and more on what your budget can absorb after everything else. The 28/36 rule is the shorthand mortgage underwriters have used for decades, and it still works as a personal sanity check.
The 28/36 rule
Two ratios, both based on gross monthly income:
- Front-end (28%) — total housing cost (principal, interest, property tax, insurance, HOA) should stay at or below 28% of gross monthly income.
- Back-end (36%) — total monthly debt (housing + car loans, student loans, credit-card minimums, child support) should stay at or below 36% of gross monthly income.
Some lenders will stretch the back-end to 43% or even 50% for well-qualified borrowers. The 28/36 numbers aren't a legal cap — they're the level below which most households don't feel squeezed.
A worked example
Take a household earning $80,000/year gross — $6,667/month:
- 28% front-end limit → $1,867/month for PITI + HOA
- 36% back-end limit → $2,400/month for all debt
Assume $500/month in existing debts (car + student loan). Housing budget = 2,400 − 500 = $1,900/month, but the front-end still caps it at $1,867. So $1,867 is the working number.
At a 6.5% 30-year rate, with 20% down and ~$400/month set aside for taxes and insurance, you have about $1,467 left for principal + interest. That services roughly a $232,000 loan — or a $290,000 home price with 20% down.
Change one input and the answer moves fast:
| Change | New affordable home price |
|---|---|
| Baseline: 6.5% rate, 20% down, $500 debts | ~$290,000 |
| Rate drops to 5.5% | ~$318,000 |
| Rate rises to 7.5% | ~$266,000 |
| No other debts | ~$304,000 (back-end binds) |
| 10% down instead of 20% | ~$258,000 (higher loan + PMI) |
Income → rough price band
A quick reference at a 6.5% rate, 20% down, ~$300/month debts, average taxes/insurance:
| Gross income | 28% housing budget | Approx. home price |
|---|---|---|
| $50,000 | $1,167 | ~$175,000 |
| $75,000 | $1,750 | ~$270,000 |
| $100,000 | $2,333 | ~$370,000 |
| $150,000 | $3,500 | ~$560,000 |
| $200,000 | $4,667 | ~$755,000 |
These are ballparks — property tax rates, insurance, and HOA fees vary widely by location. Run your exact scenario through the House Affordability Calculator, and use the Mortgage Calculator to see the actual payment on any target price.
The levers that move the answer
- Interest rate. A 1-point rate move changes affordability by ~10%. Rate shopping is the single highest-return hour you can spend.
- Down payment. More down = smaller loan and often no PMI, both of which shrink the monthly payment.
- Other debt. Every $100/month of debt payment cuts about $15,000 off your affordable price.
- Term. A 15-year loan is cheaper overall but has a much higher monthly payment; a 30-year buys more house but costs more in interest.
Why "approved" isn't the same as "affordable"
A lender's DTI limit reflects statistical default risk, not your quality of life. Neither ratio counts childcare, healthcare, retirement contributions, or savings goals. If you're contributing 15% to retirement and paying $2,000/month for daycare, "36% for total debt" leaves less headroom than the number suggests. Build your housing budget from your after-tax cash flow — then check the 28/36 sanity check on top.
FAQ
What is the 28/36 rule for mortgages? It's an affordability guideline: keep housing costs at or below 28% of gross monthly income and total debt at or below 36%. Most lenders use it as a starting DTI benchmark.
How much house can I afford on $80,000 a year? At current ~6.5% rates with 20% down and typical debts, roughly $270,000–$290,000. See the House Affordability Calculator for your exact numbers.
Does the 28/36 rule include property tax and insurance? Yes — the 28% "housing" figure is full PITI (principal, interest, taxes, insurance), plus HOA fees where they apply. It's not just the loan payment.
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*Ready for your real number? Try the free House Affordability Calculator — enter income, debts, and rate to see your price range in seconds.*