How Much House Can I Afford? The 28/36 Rule

By Alamzeb Khan · Updated July 2026 · 6 min read · Mortgage Calculator →

How the 28/36 rule works

Two limits, computed from gross (pre-tax) monthly income; the stricter one wins:

1. 28% front-end limit — the full housing payment (principal, interest, property taxes, insurance — the PITI figure) stays at or under 28% of gross monthly income.
2. 36% back-end limit — housing plus every other debt payment (car loans, student loans, card minimums) stays at or under 36%.

Example: $84,000 salary → $7,000/month gross. Front-end cap: $1,960. If you also carry a $450 car payment and $250 in student loans, the back-end cap is $2,520 − $700 = $1,820 — the debts just shrank your house budget by $140/month, which is roughly $22,000 of home price.

How much house you can afford by income

Assumptions: 20% down, 6.5% rate, 30-year term, 1.1% property tax, $1,500/year insurance, no other debts. Reproduce or adjust any row in the mortgage calculator.

Every extra debt payment, every quarter-point of rate, and every dollar of HOA dues moves these numbers — that’s not a flaw in the rule, it’s the rule doing its job of connecting the house to the rest of your finances.

Why mortgage pre-approval is not a budget

Lenders routinely approve back-end ratios of 43%, sometimes higher. Their model asks will this borrower repay; it does not ask whether you’ll also be able to save for retirement, replace a car, or absorb a layoff. The gap between 36% and 43% of gross income is precisely the money that would otherwise become your emergency fund and retirement contributions.

A useful reframe: the 28/36 rule isn’t a limit on the house you can buy. It’s protection for the 64% of your income that has other jobs to do.

Hidden costs first-time buyers forget

• Closing costs — typically 2–5% of the loan, due at signing on top of the down payment.
• PMI — usually required under 20% down; 0.3–1.5% of the loan per year until you reach 20% equity.
• Maintenance — budget roughly 1% of the home’s value per year; roofs and furnaces don’t care about your amortization schedule.
• The moving-in bulge — furniture, tools, immediate repairs; commonly $5,000–$15,000 in the first year.

Steps to buy a house you can actually afford

1. Compute your 28/36 caps from the table above (or your own numbers).
2. Price the target home honestly in the mortgage calculator — taxes and insurance included.
3. Build the down payment as a dated goal with the savings goal calculator.
4. Keep your emergency fund intact through closing — a new house with zero cushion is how homeowners end up carrying card debt at 24%.

Home affordability examples by income

Each income row from the table, preloaded into the mortgage calculator with 20% down, 6.5%, 30 years, 1.1% tax:

• $72,000 income → ~$260,000 home — check the PITI figure against the $1,680 cap.
• $84,000 income → ~$307,000 home — the $1,960 cap in action.
• $120,000 income → ~$448,000 home — and notice how property tax scales with price, quietly eating the cap.

Then stress-test your real scenario: raise the rate a half-point, drop the down payment to 10% (PMI warning appears), and watch the 28% income requirement in the results card. If the stressed version breaks your budget, the un-stressed version was luck, not affordability.

Frequently asked questions