Insights
How Much House Can I Afford? The 28/36 Rule and What Lenders Really Check (2026)
The fastest honest answer to "how much house can I afford?" is a rule lenders have used for decades: the 28/36 rule. Spend no more than 28% of your gross monthly income on housing, and no more than 36% on all your debt combined. This guide turns that into a real dollar figure with a worked example, then shows how your interest rate and down payment move the number — try your own inputs in the mortgage calculator as you read.
The 28/36 rule
The rule has two halves, both measured against your gross (pre-tax) monthly income:
- 28% — the front-end ratio. Your total housing payment (principal, interest, property taxes and insurance, together called PITI) should stay under 28% of gross monthly income.
- 36% — the back-end ratio. Your housing payment plus every other monthly debt — car loans, student loans, minimum credit-card payments — should stay under 36%.
Whichever limit you hit first is the one that caps your budget. Someone with a big car loan is limited by the 36% back-end rule; someone debt-free is limited by the 28% front-end rule.
What debt-to-income actually measures
Both halves are debt-to-income (DTI) ratios — the share of your income already committed to debt. Lenders lean on DTI because it predicts whether you can absorb a new mortgage payment on top of everything else. A lower DTI means more breathing room and, often, a better interest rate. Many loan programs will stretch the back-end ratio higher (43% or more) for strong borrowers, but 28/36 is the sensible target that keeps you comfortable rather than merely approved.
A worked $90,000 example
Say you earn $90,000 a year, which is $7,500 gross per month:
| Step | Figure |
|---|---|
| Gross monthly income | $7,500 |
| 28% housing limit (PITI) | $2,100 / month |
| Less taxes & insurance (est.) | −$300 |
| Left for principal & interest | ≈ $1,800 / month |
| Loan at 7% over 30 years | ≈ $270,000 |
| With 10% down | ≈ $300,000 home |
At a 7% rate, every $1,000 of loan costs about $6.65 a month in principal and interest, so an $1,800 budget supports roughly a $270,000 loan. Add a 10% down payment and you are shopping around the $300,000 mark — provided your other debts leave the 36% back-end rule intact.
The three levers: rate, down payment, term
Your budget is not fixed — three things move it:
- Interest rate. This is the big one. At 6% instead of 7%, that same $1,800 payment supports roughly $300,000 of loan instead of $270,000 — a full percentage point buys you about 10% more house.
- Down payment. More down means a smaller loan and lower payment. Crossing 20% down also removes PMI (private mortgage insurance), which otherwise adds to your monthly cost for no benefit to you.
- Loan term. A 30-year loan has a lower monthly payment than a 15-year one, so it "affords" more house — but you pay far more total interest. Do not confuse a lower monthly payment with a cheaper house.
What lenders check beyond the ratios
The 28/36 rule gets you in the ballpark, but an underwriter also weighs your credit score (it sets your rate), your down payment and cash reserves, and your employment stability. Two people with identical incomes can be approved for very different amounts based on these.
Affordable vs approved: not the same thing
A lender's maximum is a ceiling, not a target. Buying at the top of your approval leaves nothing for a leaking roof, a job gap, or simply enjoying your life. Many buyers deliberately shop 10–20% below their maximum. Run a few scenarios — a lower price, a bigger down payment, a different rate — in the mortgage calculator, and choose the payment you would be comfortable making in a bad month, not just a good one.