How Much House Can I Afford? The 28/36 Rule, Worked Out
Published 8 November 2026 · ToolsZio
Before you fall in love with a house, you need an honest answer to one question: how much house can I afford? The amount a lender will approve is not the same as the amount that leaves you comfortable each month. Stretching for the maximum approval is how many buyers end up house poor — a beautiful home, and no money left for anything else. The classic way to set a responsible budget is the 28/36 rule, the guideline lenders have relied on for decades, and it takes less than a minute to apply to your own numbers.
This guide explains the rule in plain English, works through a full example with an $80,000 income and $400 a month in other debts, showing how a monthly payment turns into a maximum home price. Every number below has been calculated step by step, so you can check it.
What the 28/36 rule actually says
The 28/36 rule has two parts, and both use your gross monthly income — what you earn before tax, not what lands in your bank account. The first part, the front-end ratio, says your total monthly housing cost should be no more than 28% of your gross monthly income. The second part, the back-end ratio, says your total monthly debts, including housing, should be no more than 36% of your gross monthly income.
The 28% housing figure is not just the loan payment. It covers your full monthly housing cost: principal and interest, property taxes, homeowners insurance, and mortgage insurance if you put down less than 20%. That matters, because taxes and insurance can easily add several hundred dollars a month. A payment that looks affordable on the loan alone can break the rule once the full cost is counted.
The 36% back-end figure counts everything else you owe each month as well: car payments, student loans, credit card minimums and any other recurring debt. Add those to your housing cost, and the total must stay at or below 36% of your gross monthly income. Your housing budget is whichever of the two limits is lower — and, as the example below shows, it is not always the 28% one.
From a monthly payment to a home price
A monthly budget is useful, but listings show prices, not payments. To convert one into the other, subtract monthly property tax and insurance from your maximum housing payment — what is left is the most you can spend on principal and interest. Then reverse the loan payment formula to find the largest loan that payment supports at your rate and term, and add your down payment to get your maximum home price.
That last step is why the interest rate matters so much. At a higher rate, the same monthly payment supports a much smaller loan, so your maximum home price falls even though your income has not changed. A bigger down payment helps twice: it raises your maximum price directly, and it can remove mortgage insurance, freeing up room inside the 28% limit.
When the back-end rule binds instead
With $400 a month in other debts, the front-end rule binds. But raise those debts to $800 a month and the picture flips: the back-end rule caps your housing cost at $2,400 minus $800, which is $1,600 a month — below the $1,866.67 the front-end rule allows. Your maximum housing payment would then be $1,600, and your maximum home price would fall with it.
This is why paying down a car loan or a credit card before house hunting can raise the home you can afford. Every dollar of monthly debt you remove adds a dollar of room under the back-end cap, until the front-end rule takes over again.
What the rule leaves out
The 28/36 rule is a guardrail, not a complete budget. It does not count home maintenance, roughly 1% of the home's value per year, or utilities, which run higher in a larger home, or homeowners association dues, which can add hundreds of dollars a month and sit outside the 28% calculation entirely.
It also says nothing about your emergency fund. Buying at the very top of the rule leaves no cushion if the roof leaks or your income dips. Many buyers aim a little below the maximum — treating 25% of gross income as their housing target — and keep the difference as breathing room. The rule tells you the ceiling; your own budget decides where below it you want to live.
How to use the calculator
Start with your gross annual income and your other monthly debt payments, then add your down payment, the interest rate, the loan term, and your annual property tax and homeowners insurance. The calculator works out both ratios, subtracts taxes and insurance to find your maximum principal and interest payment, reverses the payment formula to find the largest loan that payment supports, and adds your down payment to give your maximum home price. Try a few versions — your debts after paying off the car, a 6.5% rate against 7.5%, a 15-year term against 30 years — and see which lever moves your maximum price most.
Worked Example
Take a household earning $80,000 a year with $400 a month in other debts. Gross monthly income is $80,000 divided by 12, which is $6,666.67. The 28% rule caps total housing costs at 28% of $6,666.67, which is $1,866.67 a month. The 36% rule caps all debts at 36% of $6,666.67, which is $2,400.00 a month — and after the $400 of other debts, that leaves room for $2,000.00 of housing. So the maximum housing payment is $1,866.67 a month.
Now suppose property tax costs $300 a month and homeowners insurance costs $150 a month. Subtracting those from $1,866.67 leaves at most $1,416.67 a month for principal and interest. At a 6.5% fixed rate over 30 years, a $1,416.67 monthly payment supports a maximum loan of $224,131.99. With a $50,000 down payment, the maximum home price is $224,131.99 plus $50,000, which is $274,131.99. As a check, the back-end ratio is $1,866.67 of housing plus $400 of other debts, divided by $6,666.67 of income — 34.00%, comfortably inside the 36% limit.
Try it yourself: enter your own numbers in our free Mortgage Affordability Calculator — it runs entirely in your browser and shows the same working step by step.
Frequently Asked Questions
What is the 28/36 rule for buying a house?
The 28/36 rule is a traditional lender guideline. It says your housing costs should be no more than 28% of your gross monthly income, and your total monthly debts, including housing, should be no more than 36% of your gross monthly income. Lenders today sometimes allow higher ratios, but the 28/36 rule remains a sensible, conservative target.
How much house can I afford on $80,000 a year?
On $80,000 a year with $400 a month in other debts, the 28/36 rule caps your housing cost at $1,866.67 a month. After $300 a month of property tax and $150 a month of insurance, at most $1,416.67 a month can go to principal and interest, which supports a loan of $224,131.99 at 6.5% over 30 years. With a $50,000 down payment, that means a maximum home price of $274,131.99.
Does the 28% include taxes and insurance?
Yes. The 28% limit covers your full monthly housing cost, not just the loan payment: principal and interest, property taxes, homeowners insurance, and mortgage insurance if you put down less than 20%. The calculator subtracts tax and insurance from the housing maximum first, so the loan it suggests fits the real total payment.
What if my other debts are high?
High debts tighten the back-end limit. If your other debts were $800 a month instead of $400, the 36% rule would cap your housing cost at $2,400 minus $800, which is $1,600 a month — below the $1,866.67 the front-end rule allows. Paying down a monthly debt before house hunting is one of the fastest ways to raise the home you can afford.
Is the 28/36 rule a lender requirement?
No, it is a guideline, not a law. A bank looks at your credit score, employment history and savings, and may approve you for more or less than the 28/36 rule suggests. The calculator gives you a responsible affordability estimate, often lower than the maximum a lender would approve — and shopping within it leaves room for maintenance, emergencies and the rest of your life.