How Much House Can You Afford? The 28/36 Rule Explained
The rule lenders actually use to size a mortgage to your income, a worked example, and the costs the rule leaves out.
Most lenders cap your monthly housing payment at 28% of your gross monthly income, and your total debt payments (housing plus everything else) at 36% — the "28/36 rule." On a $70,000 salary, that's roughly a $1,633/month housing budget, which typically supports a home price in the low-to-mid $200,000s depending on your rate and down payment.
Your real number depends on your down payment, interest rate, and existing debt — plug those into our home affordability calculator for an exact figure.
"How much house can I afford?" feels like it should have a simple answer, and lenders do use a fairly simple rule to get a first estimate — but the rule only tells part of the story. Two buyers with the same income can afford very different homes depending on their down payment, credit score, existing debt, and the interest rate they lock in. This guide walks through the rule lenders actually apply, a full worked example, and the real costs of homeownership that the rule doesn't capture.
The 28/36 Rule, Explained
The 28/36 rule is the affordability guideline most conventional lenders start from. It has two parts:
Total debt payments ≤ 36% of gross monthly income
The 28% figure — often called the "front-end ratio" — is meant to cover your full monthly housing cost: principal, interest, property taxes, homeowners insurance, and HOA dues where they apply (collectively known as PITI). The 36% figure, the "back-end ratio," adds in every other recurring debt payment: car loans, student loans, minimum credit card payments, and personal loans.
These aren't hard laws — they're underwriting guidelines, and actual limits vary by loan program. Conventional loans often allow a back-end ratio up to 45%, and sometimes higher with strong compensating factors like a large down payment or excellent credit; FHA loans typically allow a similar range. Treat 28/36 as a conservative, comfortable starting point rather than the absolute ceiling of what a lender might approve you for.
Worked Example
Take a household with $90,000 in combined gross annual income ($7,500/month) and a $400/month car payment, no other debt:
| Step | Calculation | Result |
|---|---|---|
| Gross monthly income | $90,000 ÷ 12 | $7,500 |
| Max housing payment (28%) | $7,500 × 0.28 | $2,100 |
| Max total debt (36%) | $7,500 × 0.36 | $2,700 |
| Room left for housing after car payment | $2,700 − $400 | $2,300 |
Here, the 28% housing cap ($2,100) is actually the binding constraint, not the 36% total-debt cap — since $2,100 is less than the $2,300 left over. This household should budget for roughly a $2,100/month PITI payment. Feed that number, plus an estimated rate and down payment, into our mortgage payment calculator to work backward into an approximate home price.
What the 28/36 Rule Doesn't Include
Covered by the 28% figure
- Principal and interest
- Property taxes
- Homeowners insurance
- PMI, if your down payment is under 20%
- HOA dues, where applicable
Not covered — budget separately
- Closing costs (typically 2-5% of purchase price)
- Moving costs
- Ongoing maintenance (a common rule of thumb is ~1% of home value per year)
- Utilities, which are often higher than renting
- Furnishing and immediate repairs
The 28/36 rule is most useful for
- A quick first estimate before you start house hunting or talk to a lender
- Comparing affordability across different income and debt scenarios
- Sanity-checking a pre-approval number a lender gives you
- Deciding how much of a raise or bonus to put toward a larger housing budget
How Down Payment and Rate Change Your Number
At the same monthly payment, a larger down payment and a lower interest rate both let you afford a higher purchase price, because less of your payment goes to interest and PMI. A buyer putting 20% down at a given rate can typically afford a meaningfully higher home price than a buyer putting 5% down at the same monthly payment — both because there's no PMI, and because the loan amount itself is smaller relative to the price. Run a few down-payment scenarios through our down payment calculator to see how that trade-off plays out for your numbers.
Worth knowing: Your debt-to-income ratio (DTI) is the same 36% figure lenders check, just calculated directly rather than through the 28/36 shortcut. Run your own numbers through our debt-to-income ratio calculator to see exactly where you stand before applying for pre-approval.
Frequently Asked Questions
What is the 28/36 rule?
The 28/36 rule is a lending guideline that caps your monthly housing payment at 28% of gross monthly income, and your total monthly debt payments (including housing) at 36%. It's a widely used rule of thumb, not a law — actual limits vary by lender and loan program.
How much house can I afford on a $70,000 salary?
At $70,000/year ($5,833/month gross), the 28% cap suggests a maximum housing payment around $1,633/month. Depending on your interest rate, down payment, taxes, and insurance, that typically supports a home price in the low-to-mid $200,000s — use a home affordability calculator with your actual rate and debts for a precise figure.
Does the 28/36 rule include taxes and insurance?
Yes. The 28% housing figure is meant to cover the full PITI payment — principal, interest, property taxes, and homeowners insurance — plus HOA dues where they apply, not just principal and interest.
Can I afford more house if I have no other debt?
Often yes. Since the 36% cap includes all debt, having no car payment, student loans, or credit card balances leaves more room under that ceiling, which some lenders will let you shift toward a larger housing payment — though many still hold to the 28% housing cap regardless.
How much should I put down on a house?
20% down avoids private mortgage insurance (PMI) on a conventional loan and lowers your monthly payment, but many buyers put down far less — conventional loans often allow 3-5% down, and FHA loans as little as 3.5%. A smaller down payment means a higher monthly payment and added PMI cost until you reach 20% equity.
What other costs should I budget for besides the mortgage payment?
Closing costs (typically 2-5% of the purchase price), moving costs, and ongoing maintenance — commonly budgeted at roughly 1% of the home's value per year — are all costs the 28/36 rule doesn't directly capture but should factor into what you can comfortably afford.
