How Much House Can I Afford? (The 28/36 Rule)
4 min read
Lenders do not just look at your salary - they look at how much of it your debts already claim. The classic guideline is the 28/36 rule, and it gives you a realistic price range before you fall in love with a listing.
Here is how to estimate how much house you can afford.
Step by step
- 1Calculate 28% of your gross monthly income
Lenders generally want your total housing payment (principal, interest, taxes, insurance) at or below 28% of gross monthly income. On 6,000 a month, that is about 1,680.
- 2Check the 36% total-debt limit
Your housing payment plus all other monthly debt (car, student loans, credit cards) should stay under about 36% of gross income - 2,160 on that same income.
- 3Factor in your down payment
A larger down payment means a smaller loan for the same house, and 20% down avoids private mortgage insurance (PMI).
- 4Work back to a price
From the affordable monthly payment, the rate, and the term, you can back into a loan amount and add your down payment to get a target price.
- 5Use the calculator
Enter your income, debts, down payment, and rate in the Home Affordability Calculator to see a realistic price range.
Tips
- Affordable on paper is not the same as comfortable - leave room for savings, emergencies, and maintenance (budget ~1% of the home value per year).
- Paying down a car loan or credit card before applying can meaningfully raise how much home you qualify for.
- Get pre-approved to see what a lender will actually offer, then shop below that ceiling.
Frequently asked questions
What is the 28/36 rule?
A lending guideline: keep your housing payment under 28% of gross monthly income, and all debt payments combined under 36%.
How much should I put down on a house?
20% lets you avoid PMI and lowers your payment, but many loans allow far less. More down means a smaller loan and less interest.
Does my other debt affect how much house I can afford?
Yes. Car loans, student loans, and credit card minimums count toward the 36% total-debt limit, reducing what you can borrow for a home.