The 28/36 rule and what it means
The traditional guideline has two parts. The front-end ratio says total monthly housing costs should stay within about 28% of gross monthly income. Housing costs here means full PITI, that is principal, interest, property taxes and insurance, plus HOA dues and any mortgage insurance, not just principal and interest.
The back-end ratio says total monthly debt payments, housing plus car loans, student loans, credit card minimums, personal loans and child support, should stay within about 36% of gross monthly income.
On a $90,000 salary, or $7,500 a month gross, that points to roughly $2,100 of housing cost and $2,700 of total debt. The calculator above produces the housing figure directly: enter a price and your assumptions, then compare total monthly outflow against your own 28% number.
What lenders will actually approve
In practice, approvals routinely exceed 36%. Conventional loans backed by the major agencies frequently permit back-end ratios up to 45%, and up to 50% with compensating factors such as substantial cash reserves, a high credit score or a large down payment. FHA is more permissive still, commonly approving in the low- to mid-40s and higher with strong compensating factors.
That approval is a statement about default probability across a large portfolio, not a judgement about your life. A 45% debt-to-income ratio is survivable but leaves very little room for saving, and a household approved at that level is one job loss or major repair away from difficulty. Treat the lender's maximum as the outer boundary, not the target.
The costs the ratios leave out
Underwriting ignores anything that does not appear as a monthly credit obligation. Your own budget should not.
- Maintenance and repairs: commonly estimated at 1% to 2% of home value per year. On a $400,000 house that is $4,000 to $8,000 annually, and it arrives unevenly: nothing for two years, then a $12,000 roof.
- Utilities: often materially higher than in a rental, especially moving from an apartment to a detached house with more square footage to heat and cool.
- Childcare, tuition and care costs: invisible to underwriting, frequently the largest line in a family budget after housing.
- Retirement contributions: underwriting does not care whether you save. Your future does.
- Commuting: a cheaper house 40 minutes further out can cost more once fuel, tolls, vehicle wear and time are counted.
- Furnishing and immediate improvements: the first year of ownership carries one-time costs that rarely fit the budget people plan.
Cash required to close, not just the down payment
Affordability is constrained by cash on hand as much as by income. Beyond the down payment, expect closing costs of roughly 2% to 5% of the purchase price, covering lender fees, title insurance, appraisal, recording and prepaid items. Lenders also collect several months of property tax and insurance upfront to seed the escrow account.
Keep a genuine emergency reserve after closing rather than draining savings to reach a larger down payment. Three to six months of expenses matters far more to your resilience than an extra percentage point of equity, and many loan programmes explicitly credit reserves as a compensating factor during underwriting.
How to raise what you can afford
- Improve your credit score: moving from the low 600s into the 740s can cut your rate meaningfully and reduce or eliminate mortgage insurance cost, which raises the price you can support at the same payment.
- Pay off a car loan: eliminating a $500 monthly obligation frees roughly $500 of ratio capacity, which supports considerably more mortgage than the same amount added to a down payment.
- Reconsider location: property tax rates vary enormously. The same payment buys a materially more expensive house in a low-tax county than a high-tax one. Try several states in the calculator to see the effect.
- Extend the term: a 30-year loan lowers the required payment relative to a 15-year loan and raises the qualifying amount, at the cost of substantially more lifetime interest.
- Reach 20% down: eliminating mortgage insurance removes a monthly cost that buys you no equity.
Set your own number first
Before speaking to a lender, decide what monthly housing payment fits the life you want, including retirement saving, travel, and whatever else matters to you. Work backwards from that figure to a price using the calculator above. Then get pre-approved and note the difference between your number and theirs.
Buyers who go in without their own ceiling tend to shop at the pre-approval limit, because that is the number the search filters default to. Buyers who set the ceiling first tend to buy comfortably below it.
Frequently asked questions
How much house can I afford on my salary?
A common starting point is keeping full housing costs within 28% of gross monthly income and all debt payments within 36%. The right figure for you depends on your other obligations, savings goals, job stability and the property tax rate where you are buying.
What is debt-to-income ratio and why does it matter?
It is your total monthly debt payments divided by gross monthly income, and it is the primary constraint in mortgage underwriting. Conventional loans often allow up to 45%, and higher with compensating factors, but approval at that level leaves little margin for saving or emergencies.
Should I borrow the full amount I am pre-approved for?
Usually not. Pre-approval reflects gross income and reported debts only. It cannot account for childcare, retirement contributions, maintenance or the cost of living where you actually live. Most buyers should target meaningfully below their approval limit.
How much should I budget for home maintenance?
Between 1% and 2% of the home's value each year is the common planning range, higher for older homes. The spending is lumpy rather than steady, so setting the money aside monthly is the practical approach.
Does a larger down payment increase how much house I can afford?
It helps in two ways: it reduces the loan amount and therefore the payment, and once it reaches 20% it eliminates mortgage insurance. But reducing an existing monthly debt payment often expands your qualifying capacity more per dollar than adding to the down payment does.
Reference sources
Related calculators
How this estimate is built
Principal and interest come from the standard amortization formula, worked through in full on the formula reference page. Property tax, insurance, PMI and loan-program figures layer on top from published assumptions — each one sourced, dated and listed on the methodology page. Every result here is an estimate built from public data, not a quote: confirm the specifics with a lender before relying on it.
For developers
This calculation is also available as a REST API and through an MCP server, both running the same engine as this page — so the figures match by construction rather than by convention. No key required.