How Much House Can You Actually Afford? (The 28/36 Rule)
What the 28/36 rule actually says
The 28/36 rule sets two ceilings, both measured against your gross (pre-tax) monthly income. The front-end ratio says your total housing payment — principal, interest, property taxes, and homeowners insurance, often abbreviated PITI — should stay at or below 28% of gross income. The back-end ratio says all your monthly debt payments combined — housing plus car loans, student loans, credit card minimums, and any other required payment — should stay at or below 36%.
The Consumer Financial Protection Bureau frames the same idea through debt-to-income (DTI): lenders look hardest at your back-end DTI, and the CFPB notes that 43% is a common upper limit for a qualified mortgage, with many lenders stretching further. That is exactly the gap that matters. The bank's ceiling protects the bank; the 28/36 rule protects you. A 43%-DTI approval can be technically affordable and still leave you house-poor.
What lenders count and what they don't
Underwriters build your ratios from documentable, recurring numbers, and the details change your answer more than people expect. On the income side they generally count base salary, and they average bonus, commission, and self-employment income over two years — a strong recent year does not fully count if last year was weak. On the debt side they count the minimum required payment on every open account, even a card you pay in full each month, plus car leases, student loans (even if deferred), child support, and alimony.
What they typically do not count: your 401(k) contributions, health insurance premiums, utilities, groceries, day care, or the cost of actually living. That is the catch — the 36% back-end ceiling still leaves your take-home pay covering all of those out of the remaining income. A borrower who maxes out at 36% DTI on paper can be squeezed hard in real life once taxes, retirement savings, and childcare come out of the same paycheck.
Turning the rule into a home price
The ratios give you a monthly ceiling; converting that into a purchase price takes three more inputs: the mortgage rate, the down payment, and the share of your payment eaten by taxes and insurance. Roughly a quarter to a third of a monthly PITI payment can go to property taxes, insurance, and any mortgage insurance, leaving less than you would think for principal and interest.
Here is how the 28% housing ceiling translates at a 6.8% rate with 10% down and typical tax and insurance loads:
| Gross annual income | 28% housing ceiling/mo | Approx. affordable home price |
|---|---|---|
| $60,000 | $1,400 | ~$195,000 |
| $90,000 | $2,100 | ~$300,000 |
| $120,000 | $2,800 | ~$400,000 |
| $160,000 | $3,733 | ~$535,000 |
| $200,000 | $4,667 | ~$670,000 |
These are approximations that assume no other debt eating into the 36% ceiling — add a $500 car payment and every price above shrinks. The home affordability calculator does this conversion precisely once you enter your income, debts, rate, and down payment.
A worked example: the $90,000 household
Take a household earning $90,000 a year, or $7,500 a month gross. The 28% front-end ceiling is $2,100 a month for housing; the 36% back-end ceiling is $2,700 for all debt. Suppose they have a $400 car payment and $150 in student loan and card minimums — $550 of non-housing debt. That leaves $2,150 under the back-end ceiling, so the front-end $2,100 is the binding constraint.
Of that $2,100, assume $500 covers property tax, insurance, and mortgage insurance, leaving $1,600 for principal and interest. At 6.8% over 30 years, $1,600 a month supports a loan of about $245,000. With 10% down that is a home price near $272,000; with 20% down and no mortgage insurance freeing up a bit more room, closer to $300,000. Notice the bank might approve them for a $380,000 loan at a 43% DTI — but that payment would consume savings capacity they will want for retirement and the inevitable home repairs. Once you fix your target price, the mortgage payment calculator shows the exact monthly payment for any price, rate, and down payment combination.
When to spend less than the rule allows
The 28/36 rule is a ceiling, not a target, and several situations argue for staying well below it. If your income is variable — commission, freelance, or a single earner supporting a family — a lower ratio buffers the lean months. If you are behind on retirement savings, remember the mortgage competes directly with the 401(k) match and compounding you cannot get back. If you are buying an older home, budget roughly 1% of its value a year for maintenance the ratios ignore entirely.
A practical move is to shop at 25% of gross for housing rather than 28%, which leaves a genuine cushion. The goal is not to hit the maximum the formula permits; it is to own a home and still fund the rest of your financial life. Run your real numbers through the home affordability calculator, then pressure-test the payment with the mortgage payment calculator before you fall in love with a listing above your comfortable range.
Frequently asked questions
What is the 28/36 rule for buying a house?
It is a guideline that says your monthly housing payment (principal, interest, taxes, and insurance) should stay at or below 28% of your gross monthly income, and all your monthly debt payments combined should stay at or below 36%. The 28% is the front-end ratio and the 36% is the back-end ratio; both are measured against pre-tax income.
Why will a bank approve me for more than I can afford?
Lenders qualify you on debt-to-income ratios that can reach 43% or higher, and those ratios ignore living costs like retirement savings, childcare, groceries, and utilities. Their ceiling protects the loan, not your budget. A payment that fits the bank's formula can still leave you house-poor once real expenses come out of your take-home pay.
What income and debts do lenders actually count?
Lenders count base salary and a two-year average of bonus, commission, or self-employment income. On the debt side they count minimum required payments on every open account — cards, car loans, student loans even if deferred, and support obligations. They generally do not count 401(k) contributions, insurance premiums, utilities, or day care.
How much house can I afford on a $90,000 salary?
At the 28% housing ceiling, roughly $2,100 a month goes to housing. After property tax and insurance, that supports a mortgage around $245,000, or a home price near $272,000 to $300,000 at 2026 rates depending on your down payment and other debts. Other monthly debts lower that figure dollar for dollar.
Does the 28/36 rule include property taxes and insurance?
Yes. The 28% front-end ratio is meant to cover full PITI — principal, interest, property taxes, and homeowners insurance, plus mortgage insurance if you put down less than 20%. Because taxes and insurance can eat a quarter to a third of the payment, the amount left for principal and interest is smaller than many buyers assume.
Should I always spend up to what the 28/36 rule allows?
No. Treat it as a ceiling, not a target. Shopping at around 25% of gross income for housing leaves a real cushion for retirement savings, emergencies, and the roughly 1% of home value a year that maintenance costs. Variable income, being behind on retirement, or an older home are all reasons to stay comfortably below the maximum.
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