How Much House Can You Afford? The 28/36 Rule and Its Limits

Ask a lender how much house you can afford and you will get an answer to a different question: how much they are willing to lend. Those numbers can sit tens of thousands of dollars apart, and the gap is where "house poor" households are made. The classic guardrail is the 28/36 rule, and it is worth understanding both for what it measures and for what it misses.

What 28/36 says

The guideline holds that housing costs — principal, interest, property tax, and insurance (PITI) — should stay under 28% of gross monthly income, and total debt payments (housing plus cars, student loans, cards) under 36%. On a $100,000 household income, that caps housing near $2,333 a month and all debt near $3,000. Lenders' actual approval ceilings often run looser — debt-to-income ratios into the 40s — which is precisely the point: the approval line is not the comfort line.

What the rule misses

• It reads gross, you live on net. 28% of gross can be 38% of take-home for a high-tax, high-benefit household. Run the ratio against your actual deposit too.
• It ignores the rest of your life. Childcare, medical costs, retirement savings rates, and single-versus-dual income risk all vary household to household; a family with $1,800 of daycare has less room than the ratio implies.
• It ignores the house itself. Maintenance runs roughly 1–2% of home value a year on average, lumpy and unscheduled. Utilities scale with square footage. A budget maxed on PITI has nothing left for a roof.

A sturdier sequence

Work backwards from your budget, not forwards from an approval: decide the monthly all-in housing figure that leaves your savings rate and life intact; subtract tax and insurance for your target area; what remains is the principal-and-interest payment your price range must fit inside — at today's rates, with your down payment. That price is your number, whatever the pre-approval letter says. It is common, and completely fine, for it to be lower.

The mortgage affordability calculator runs this backwards math directly, and the debt-to-income calculator shows the ratios a lender will compute — so you know both lines, and choose the one that protects your budget.

Run your own numbers

More on home & mortgage

• PITI: The Four Payments Hiding Inside Your Mortgage Payment
• 15-Year vs. 30-Year Mortgage: Price of Freedom, Price of Flexibility
• The 20% Down Payment: Where the Rule Came From and When to Break It

This article is general education, not tax, legal, investment, or financial advice. Figures used in examples are illustrations, not quotes or predictions. For decisions that depend on your full situation, talk to a qualified professional.