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

The honest answer to “how much house can I afford?” is not a single number — it is the price at which your monthly payment still leaves room for everything else in your life. Lenders answer it with two ratios; this guide explains them, shows how they set your real budget, and points you to the calculator that does the math.

The 28/36 rule, explained

Most mortgage underwriting still anchors on two limits. The front-end ratio says your total housing payment — principal, interest, property taxes, and insurance — should stay under 28% of your gross monthly income. The back-end ratio says all of your debt payments combined, including that housing payment plus car loans, student loans, and credit card minimums, should stay under 36%.

Whichever limit you hit first sets your budget. Someone with no other debt is usually capped by the 28% housing rule; someone with a big car payment and student loans is capped by the 36% total-debt rule, well before the housing limit bites.

Why your down payment matters twice

A larger down payment helps in two separate ways. First, every dollar down is a dollar you do not have to finance, so it raises the price you can reach. Second, crossing 20% down removes private mortgage insurance, freeing $100 to $300 a month that would otherwise protect the lender instead of buying you more house.

What counts as debt (and what does not)

The back-end ratio counts recurring credit obligations. It does not count the everyday costs lenders assume come out of whatever is left:

• Counts: car loans, student loans, personal loans, and minimum credit-card payments.
• Does not count: utilities, groceries, phone plans, insurance premiums, or subscriptions.

This is why paying down a car loan or a credit card before you apply can raise your maximum price more than saving another few thousand for the down payment.

Approvable is not the same as comfortable

Lenders will sometimes stretch these ratios — FHA loans routinely allow back-end ratios into the mid-40s. But the maximum a lender will approve is rarely the amount you want to actually live with. A payment that consumes 43% of your income leaves little margin for a job change, a new baby, or a bad year. Many planners suggest borrowing below what the ratios allow, not up to it.

Run your own number

Plug your income, existing debts, down payment, and rate into the home affordability calculator below. It applies the 28/36 rule exactly as a lender would, tells you which limit is binding for you, and shows the full monthly breakdown — including PMI if your down payment is under 20% — at the maximum price.