US Real Estate & Mortgage Research Analyst
Published: March 20, 2026 · Updated: March 20, 2026 · 8 min read
Key Takeaways
- • Use the 28/36 rule: housing ≤ 28% of gross income, total debt ≤ 36%
- • Qualify on your full PITI payment, not just principal and interest
- • Existing debts directly reduce how much you can borrow
- • Lenders may approve more than is comfortable — set your own limit
- • Run the numbers in our free Mortgage Payment Calculator
"How much house can I afford?" is the question every buyer should answer before shopping. The honest answer depends on your income, your debts, and how much of a monthly payment you can comfortably carry — not just the maximum a lender will approve. Here's how to estimate it properly.
The 28/36 Rule
The 28/36 rule is the most widely used affordability guideline:
- Front-end (28%): Your housing payment (PITI) should be no more than 28% of gross monthly income.
- Back-end (36%): Your total monthly debt payments (housing + all other debts) should be no more than 36% of gross monthly income.
Many loan programs allow higher ratios — for example, FHA often permits a back-end DTI up to 43% — but 28/36 keeps a healthy buffer for savings and unexpected costs.
Work It Back From Your Income
Say your household earns $7,000 per month before taxes. Using the 28% front-end limit:
Affordability Example ($7,000/month gross)
• Max housing payment (28%): $1,960
• Estimated property tax + insurance: −$450
• Remaining for principal & interest: ~$1,510
• Back-end check (36%): max total debt $2,520; if other debts are $400, mortgage payment must stay under $2,120
These are planning estimates. The actual loan amount also depends on your rate, down payment, and credit.
Don't Forget the Full PITI Payment
Buyers often budget only principal and interest and are surprised by the rest. Your real monthly housing cost usually includes:
- Principal & interest: The loan payment itself
- Property tax: Set by your local assessment; varies widely by state and county
- Homeowners insurance: Typically required by the lender
- PMI: Required if your down payment is below 20%
- HOA fees: If the home is in a managed community
Your Debts Compete for the Same Budget
The back-end ratio means every existing monthly obligation reduces your borrowing power. Paying off a credit card or auto loan before applying can free up room under the 36% cap and may also improve your credit score — a double win for affordability.
Set Your Own Comfort Limit
Just because a lender approves a certain amount doesn't mean you should borrow it. Leave room in your budget for retirement contributions, an emergency fund, maintenance, and the lifestyle you value. A common personal target is keeping housing under 25% of gross income.
Calculate Your Affordability
Our free Mortgage Payment Calculator turns your income, estimated rate, tax, and insurance figures into a clear monthly payment and affordable price range. Start there, then talk to a lender for a formal pre-approval based on your full financial picture.
Editor Update Note
This article was last reviewed and updated on March 20, 2026. Affordability guidelines reflect common lending conventions and are general planning estimates; actual qualification varies by lender, loan program, credit, and current rates.
Try These Free Calculators
- Mortgage Payment Calculator — Estimate your monthly payment with principal, interest, taxes and insurance.
Frequently Asked Questions
What is the 28/36 rule for home affordability?
The 28/36 rule is a common lending guideline. It says your housing payment (principal, interest, taxes, and insurance — PITI) should not exceed 28% of your gross monthly income, and your total monthly debt payments (including the mortgage) should not exceed 36%. Many loan programs allow higher ratios with compensating factors, but 28/36 is a safe planning baseline.
How do I calculate how much house I can afford from my income?
Start with your gross monthly income. Multiply it by 0.28 to get your maximum comfortable housing payment. Then subtract estimated property tax, insurance, and any HOA or PMI to find the mortgage payment you can support, and convert that to a loan amount using a current rate. Our free Mortgage Payment Calculator does this math for you.
Why do taxes and insurance matter for affordability?
Lenders qualify you on your full PITI payment, not just principal and interest. Property taxes and home insurance can add hundreds of dollars per month depending on location and home value, so two homes at the same price can have very different monthly costs. Always budget the full housing payment, not just the loan.
Should I spend the maximum I qualify for?
Not necessarily. Lenders qualify you based on ratios, but you should also keep room for retirement savings, emergencies, childcare, and lifestyle. Many financial advisors suggest keeping total housing costs below 25% of gross income for long-term comfort — tighter than the 28% standard threshold.
How does my existing debt affect how much I can borrow?
Every monthly debt payment — auto loans, student loans, credit cards, personal loans — reduces the room left under the 36% back-end limit. Paying down revolving debt before applying can meaningfully increase the mortgage amount you qualify for.