How much house can I afford?
What the 28/36 rule actually means
The 28/36 rule is a rough affordability guardrail lenders and financial educators lean on. The first number caps your housing payment — principal, interest, property tax, and insurance — at about 28% of gross monthly income. The second caps ALL recurring debt (housing plus car loans, student loans, credit-card minimums) at about 36%.
Gross income means before taxes and deductions, not your take-home pay. That distinction matters: 28% of gross can feel like a much larger slice of the money that actually lands in your account. The rule is a ceiling, not a target — many households deliberately sit below it.
A worked example on an $80,000 salary
An $80,000 annual salary is about $6,667 per month gross. Applying 28% gives roughly $1,867 per month available for the full housing payment. Under the 36% limit, total monthly debt would stay under about $2,400 — so if you already pay $500 toward a car and student loans, that leaves closer to $1,900 for housing, and the tighter of the two limits wins.
Notice the rule gives you a monthly PAYMENT, not a purchase price. Turning $1,867/month into a home price is the step most people skip — and it's where the mortgage rate, down payment, and local tax and insurance costs do the heavy lifting.
What turns a monthly payment into a home price
The same $1,867/month buys very different homes depending on a few inputs. The mortgage rate is the biggest lever: the national average 30-year fixed rate was about 6.43% (Freddie Mac PMMS, July 2026), but rates change constantly, so check a current figure before running numbers. A higher rate means more of each payment goes to interest, shrinking the price you can support.
Your down payment sets how much of the price you finance versus pay upfront, and a smaller down payment can add private mortgage insurance. Property tax and homeowners insurance also live inside that 28% ceiling and vary widely by location. Because these interact, one way to bridge the gap is to test a home price in the Mortgage Calculator, see the resulting monthly payment, and check it against your 28% and 36% limits.
When the standard limits bend — and what that leaves out
The 28/36 rule isn't a legal cap. FHA loans, for example, can allow a higher debt-to-income ratio — often up to roughly 43-50% — which lets some buyers qualify for larger payments than the classic rule suggests. Different loan programs and lenders set their own thresholds.
Qualifying for a bigger payment isn't the same as it being comfortable. A payment near the top of what a lender allows leaves less room for maintenance, emergencies, and rate changes on adjustable loans. Running the same payment against a tighter budget and a higher rate shows whether it still holds. This is general information, not financial advice — the right number depends on your full financial picture.
Frequently asked questions
Is the 28% based on gross or take-home pay?
Does the 28% housing limit include taxes and insurance?
How does the mortgage rate change how much house I can afford?
Can I ever borrow more than the 36% total-debt limit?
Sources: Consumer Financial Protection Bureau — Buying a house; Freddie Mac — Primary Mortgage Market Survey (PMMS).
Last reviewed July 4, 2026 · Editorial policy · This is general information, not financial advice.