The 28/36 Rule: The Math Lenders Actually Use

Most lenders lean on a shorthand called the 28/36 rule to decide how much mortgage you can qualify for. It’s two ratios, both measured against your gross (pre-tax) monthly income — which matters, because your take-home pay is lower, and that’s part of why the bank’s number can feel tight in real life.

• Front-end ratio (28%): your total monthly housing payment — principal, interest, taxes, insurance, plus PMI and HOA if you have them — should generally stay at or below about 28% of your gross monthly income.
• Back-end ratio (36%): your total monthly debt — housing payment plus car loans, student loans, credit-card minimums, and other recurring debts — should generally stay at or below about 36% of your gross monthly income.

Lenders calculate what’s called your debt-to-income ratio (DTI) to underwrite your loan, and some loan programs allow a higher back-end ratio than 36% — which is exactly why a lender’s maximum approval can end up higher than what actually feels comfortable to pay every month. See the next section for real numbers on how much higher.

Whichever ratio is more restrictive for your situation is generally the one that sets your ceiling. That number is a maximum, not a target — see the section below on why aiming below it usually makes for a happier homeowner.

How Much House Can You Afford on $60k, $80k, or $100k?

The table at the top of this page gives you a starting ballpark. Here’s how those numbers actually come together, and why they’re illustrative rather than guaranteed.

Each figure applies the 28% front-end ceiling to gross monthly income, then backs into a home price using a 6.69% 30-year fixed rate (Freddie Mac’s national weekly average for the week ending August 6, 2026), a roughly 20% down payment, and an estimated 1.3% combined annual cost for property taxes and homeowners insurance, which varies a lot by state and county. It assumes minimal other monthly debt — add a car payment or student loans, and your real ceiling drops, because the back-end (36%) test starts to bind instead.

This is the single biggest reason a “how much house can I afford” number is never one fixed answer: a higher interest rate or more existing debt sharply lowers the home price a given income can support, even if your salary hasn’t changed at all. A one-point swing in mortgage rates can move your affordable price range by tens of thousands of dollars. Run your own numbers with your actual rate quote, debts, and local tax rate rather than treating any example here as a promise.

“The Bank Approved Me for More Than I Can Afford”

This is the sentence that trips up a lot of first-time buyers, and it’s usually true. The bank approves the maximum its debt-to-income limits allow — not the amount that leaves you comfortable. Those are two different numbers, and confusing them is how people end up house poor: technically able to make the mortgage payment, but with little left over for savings, emergencies, or simply living.

Here’s how much room that gap can actually be. Under Fannie Mae’s own underwriting guidelines, a manually underwritten loan caps total DTI at 36% — but that maximum can stretch to 45% for borrowers who meet certain credit-score and reserve requirements, and loans run through Fannie Mae’s automated underwriting system can be approved up to a 50% DTI. That’s the difference between a comfortable 36% ceiling and a bank-approved loan eating half of your gross income — both are “approved,” but only one leaves room to live.

For many buyers, a more comfortable target is a housing payment below the 28% ceiling — leaving room for retirement savings, an emergency fund, and the irregular costs that come with owning a home. Building the rest of your monthly budget around that lower number, rather than the bank’s maximum, is worth doing before you shop — our guide to building a budget that actually works walks through how.

The True Cost of a Home (It’s Not Just the Payment)

When people talk about “the mortgage payment,” they usually mean four things bundled together, known in the industry as PITI:

• Principal — the portion that pays down what you borrowed
• Interest — the cost of borrowing the money
• Taxes — property taxes, usually collected monthly by your lender and paid out on your behalf
• Insurance — your homeowners insurance premium

Principal and interest together are often called the P&I payment — that’s the number a loan quote usually leads with, and it’s smaller than your real monthly cost once taxes and insurance are added in.

PMI generally applies when you put down less than 20% of the purchase price on a conventional loan, and it protects the lender, not you — it’s an added monthly cost until you build enough equity to have it removed (our guide to removing PMI covers exactly how). Homeowners insurance is its own line item worth shopping carefully — see our homeowners insurance guide for what typically drives the cost up or down.

Then there’s maintenance, the cost buyers underestimate most. A widely used rule of thumb is to budget roughly 1% of the home’s value every year for upkeep and repairs — more for an older home, less for new construction in good condition. On top of the monthly numbers, remember the upfront costs too: your down payment plus closing costs, which commonly run a few percent of the purchase price.

How the Down Payment Changes What You Can Afford

It’s easy to conflate two different levers, so here’s the untangling: your income mainly determines the monthly payment you can carry, and your down payment mainly determines the price you can reach — plus whether you owe PMI at all.

You usually don’t need 20% down — many loan programs allow considerably less — but a smaller down payment means a bigger loan, a higher monthly payment, and typically PMI on top. Which program fits your situation, and how much down each one actually requires, depends on your loan type; our home loans guide walks through the options and qualifying details.

One more thread worth a mention: your credit score has a real effect on the interest rate you’re offered, which in turn moves your affordability math up or down. That’s a topic on its own, covered in our credit guides — worth a read before you start shopping for a rate.

Frequently Asked Questions

How much house can I afford on my salary?

A common starting point is the 28/36 rule: keep your housing payment under about 28% of your gross monthly income, and your total debt under about 36%. From there, your actual number depends on your interest rate, down payment, other debts, and local taxes — see the income table above for illustrative ranges.

What is the 28/36 rule?

It’s a lending guideline with two parts: your monthly housing payment should generally stay at or below about 28% of your gross income (the front-end ratio), and your total monthly debt, including housing, should stay at or below about 36% (the back-end ratio).

How much house can I afford on $60k, $80k, or $100k a year?

Using a 28% front-end ceiling and the assumptions in the table above (a 6.69% rate, about 20% down, minimal other debt), that’s roughly $210,000–$230,000 on $60k, roughly $280,000–$310,000 on $80k, and roughly $355,000–$390,000 on $100k. These are illustrative — your real number will differ.

What income do I need for a $300,000 house?

Under the same illustrative assumptions, a household income of roughly $80,000–$85,000 a year lines up with a $300,000 home — but a higher rate, less down, or more existing debt would raise that number.

Should I buy the most expensive house the bank approves me for?

Generally, no. The bank’s approval reflects the maximum your debt-to-income ratio allows, not what leaves you room for savings, emergencies, or everyday life. Many buyers are more comfortable aiming below that ceiling.

What does “house poor” mean?

It means so much of your income goes toward housing costs that little is left for savings, emergencies, or discretionary spending — even though you can technically make the payment.

What is PITI, and what’s included in my monthly payment?

PITI stands for principal, interest, taxes, and insurance — the four components of a typical mortgage payment. Depending on your loan, PMI and HOA dues can add to that total.

What costs are there besides the mortgage payment?

Beyond PITI, budget for PMI if you put down less than 20%, HOA dues if applicable, utilities, and ongoing maintenance — plus upfront closing costs at purchase.

How much should I budget for home maintenance?

A common rule of thumb is about 1% of the home’s value per year, adjusted upward for an older home or downward for new construction in good condition.

How much down payment do I actually need?

Less than you might think — many loan programs allow well under 20% down. A smaller down payment means a larger loan, a higher monthly payment, and usually PMI until you build more equity.

Does a bigger down payment let me afford a more expensive house?

Yes. A larger down payment lowers your loan amount and monthly payment, and can eliminate PMI, which together can let a given monthly budget stretch to a higher purchase price.

Does the affordability number use my gross or take-home income?

Lenders calculate DTI ratios using gross (pre-tax) income, which is one reason the bank’s maximum can feel tighter in practice than it looks on paper — your actual take-home pay is lower.

How much house can I afford with a dual or combined household income?

The same 28/36 math applies — lenders add both incomes together and also add together both borrowers’ debts, then apply the same ratios to the combined totals. Two moderate incomes with light debt often qualify for meaningfully more than either income alone, but a large debt carried by either borrower still drags on the shared back-end ratio.

Is the “3x–5x salary” rule the same as the 28/36 rule?

Not quite. “Buy a home worth 3 to 5 times your annual income” is a rough shorthand some buyers use, but it doesn’t account for your actual interest rate, down payment, or existing debt the way the 28/36 rule does. At current rates, 3–4x income tends to land closer to what the 28/36 math actually supports; treat the multiple as a sanity check, not a substitute for running your own numbers.

What income do I need for a $500,000 house?

Under the same illustrative assumptions used throughout this page (a 6.69% rate, about 20% down, minimal other debt), a household income of roughly $130,000–$140,000 a year lines up with a $500,000 home. A higher rate, a smaller down payment, or more existing debt would push that number higher.