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

Before falling in love with a house, it pays to know the number a lender will judge you by. The most widely used guideline is the 28/36 rule, and you can check yourself against it in about two minutes.

What the 28/36 Rule Says

The rule has two parts:

• 28% — the front-end ratio: your total monthly housing cost (mortgage principal and interest, property taxes, homeowners insurance, and HOA fees if any) should stay at or below 28% of your gross monthly income.
• 36% — the back-end ratio: your housing cost plus all other debt payments (car loans, student loans, credit card minimums) should stay at or below 36% of gross monthly income.

The back-end number is simply your debt-to-income ratio, the same metric lenders check on every application.

A Worked Example

Say your household earns $8,000 per month before taxes, with a $450 car payment and $250 in student loans:

• Front-end limit: 28% × $8,000 = $2,240 for total housing costs
• Back-end limit: 36% × $8,000 = $2,880, minus $700 of existing debt = $2,180 available for housing

The lower number wins, so your realistic housing budget is about $2,180/month. Subtract roughly 25–35% for taxes and insurance, and you are left with around $1,500–1,650 for principal and interest. At recent interest rates, run that payment backwards in our Mortgage Payment Calculator to see the loan size it supports — then add your down payment for the total price range.

Why Lenders Care — and Why You Should Care More

Lenders use these ratios to protect themselves against default. But approval is not the same as affordability: many programs approve DTIs up to 43–50%, which can leave you “house poor” — approved on paper, strained in real life. The 28/36 rule is deliberately conservative, and staying within it leaves room for savings, emergencies and the costs of ownership nobody budgets for (repairs average 1–2% of home value per year).

Check Your Own Numbers

Start with the Debt-to-Income Calculator to find your current back-end ratio, then experiment with loan amounts in the Mortgage Payment Calculator. If the numbers are tight, the two most powerful levers are paying off a small existing loan entirely (it removes a whole monthly payment from the ratio) and saving a larger down payment.