How Much House Can I Afford?

The 28/36 rule is two limits in one. The front-end ratio says your housing costs — the whole PITI payment of principal, interest, taxes, and insurance — should stay at or below 28% of your gross monthly income (before taxes). The back-end ratio says your total debt-to-income ratio, housing plus every other monthly debt payment, shouldn't exceed 36%. We calculate both ceilings and show you the lower one, because that's the number that actually constrains you.

Note that the rule deliberately uses gross income, because that's how lenders underwrite. Our budget planner works from net (take-home) pay instead — that's not an inconsistency, it's the difference between what a bank will lend you and what your actual paycheck has to cover.

A worked example

Take the defaults: $8,000 gross monthly income and $400 in other debt payments. The 28% housing cap is $2,240. The 36% total-debt limit is $2,880, and after the $400 of debts that leaves $2,480 of room. The lower figure wins, so the recommended housing budget is $2,240 — here the front-end (housing) limit is what binds.

To turn a payment ceiling into a rough price: remember the $2,240 has to cover taxes and insurance too. If about $280 of it goes there, the remaining ~$1,960 of principal & interest supports roughly a $310,000 loan at 6.5% over 30 years — run your own rate and down payment through the mortgage calculator to see the actual number.

One honest caveat: lenders will often approve more than the 28/36 guideline — some programs stretch back-end ratios into the mid-40s. An approval is a statement about their risk, not your comfort. A payment that squeaks past underwriting can still crowd out saving, travel, and repairs for a decade.

Common questions

Is the 28/36 rule a law? No — it's a guideline conventional lenders start from. FHA and VA loans use different (often looser) ratio limits, and individual lenders layer their own overlays on top.

Should I use gross or net income? The rule uses gross, so enter gross here. But when you plan your own monthly budget, use net — taxes come out before you ever see the money.

What counts as "debts"? Minimum required payments on loans and credit cards — car loans, student loans, card minimums, personal loans. Utilities, groceries, phone plans, and subscriptions don't count; lenders treat those as living expenses, not debt.

This is a general guideline, not a loan pre-approval. Actual lending limits depend on your credit, down payment, and the specific lender.