Last updated: October 5, 2026 · Rates and costs used here are examples, not current quotes.
How much house you can afford is not the same as how much a lender will approve. Lenders look at whether you can make the payment on paper; you have to live with it every month, alongside savings, childcare, car repairs and everything else. This guide shows how the most common rule of thumb works, walks through a full example, and explains what changes the answer.
The 28/36 rule
The 28/36 rule is a widely used guideline for a comfortable housing budget:
- 28% front-end ratio: total housing costs (principal, interest, property tax, homeowners insurance, PMI and any HOA dues) should be no more than 28% of your gross monthly income.
- 36% back-end ratio: all monthly debt payments combined, including the new housing payment, car loans, student loans and minimum credit card payments, should be no more than 36% of gross monthly income.
Whichever limit is lower sets your maximum housing payment.
Worked example: a $90,000 household income
Gross monthly income is $90,000 ÷ 12 = $7,500.
- 28% of $7,500 = $2,100 maximum for housing.
- 36% of $7,500 = $2,700 maximum for all debts.
Now assume a 30-year fixed loan at 6.5%, 10% down, property tax of 1.1% of the home’s value per year, homeowners insurance of $1,800 per year and PMI of 0.5% of the loan per year. Working backward from a $2,100 housing budget gives a maximum home price of about $279,000:
| Monthly cost | Amount |
|---|---|
| Principal & interest on a $251,423 loan | $1,589.16 |
| Property tax | $256.08 |
| Homeowners insurance | $150.00 |
| PMI | $104.76 |
| Total housing payment | $2,100.00 |
What other debts do to your budget
If the same household also pays $800 per month toward a car loan and student loans, the 36% limit leaves only $2,700 − $800 = $1,900 for housing. That lowers the comfortable home price to about $251,000. Paying off a car loan before buying can raise your budget more than months of extra saving.
What a bigger down payment does
With 20% down instead of 10%, there is no PMI and the loan is smaller, so the same $2,100 budget supports a home of about $326,000. The catch: you would need about $65,000 for the down payment, plus closing costs.
What changes how much you can afford
Interest rate
Rates have a big effect. On a $300,000, 30-year loan, the payment is $1,798.65 at 6% and $1,995.91 at 7%, a difference of nearly $200 per month. Getting quotes from several lenders and improving your credit score before applying both help.
Property taxes and insurance
Property tax rates vary enormously between states and even neighboring towns, and homeowners insurance has risen sharply in some areas. Always use local numbers; a listing’s past tax bill and an insurance quote are good starting points.
Loan term
A 15-year loan has a much higher payment, which lowers the price you can afford but saves a large amount of interest. Compare both in 15-year vs. 30-year mortgage.
Mortgage insurance
PMI adds to the monthly cost when you put down less than 20%. It is temporary on conventional loans; learn the rules in what PMI is and how to get rid of it.
What lenders actually allow
The 28/36 rule is conservative. Many lenders approve higher debt-to-income ratios, sometimes into the mid-40s or higher with strong credit, savings and automated underwriting approval. That is approval, not advice. Before stretching, check that the payment still leaves room for:
- An emergency fund of three to six months of expenses
- Retirement savings
- Maintenance and repairs, often estimated at around 1% of the home’s value per year
- Utilities, which are often higher in a house than in an apartment
Calculate your own budget
Enter a target home price, your down payment, local tax and insurance estimates into our mortgage calculator. If the total monthly payment is at or below 28% of your gross monthly income, and all debts stay under 36%, you are within the guideline.
Frequently asked questions
What is the 28/36 rule?
It is a common budgeting guideline: spend no more than 28% of your gross monthly income on housing costs (principal, interest, taxes, insurance and PMI) and no more than 36% on all debt payments combined, including the mortgage.
How much house can I afford on a $90,000 salary?
Using the 28/36 rule with a 6.5% 30-year rate, 10% down, 1.1% property tax, $1,800 a year of insurance and PMI, a household earning $90,000 with no other debt could afford a home of about $279,000. With $800 a month of other debt, the limit drops to about $251,000.
Will a lender approve me for more than the 28/36 rule?
Often, yes. Many lenders approve debt-to-income ratios above 36%, especially with strong credit and savings. Being approved for a larger loan does not mean the payment fits comfortably in your budget.
What counts as debt in the debt-to-income ratio?
Lenders count recurring monthly obligations such as car loans, student loans, minimum credit card payments, personal loans and child support, plus the new housing payment. Utilities, groceries and insurance other than homeowners insurance are usually not included.
Sources: CFPB: What is a debt-to-income ratio?; CFPB: Buying a House. Example calculations by ToolStackIA.
This article is for educational purposes only and is not financial advice. Loan programs, rates and rules change; confirm details with your lender or a HUD-approved housing counselor.