How Much House Can I Afford? The 28/36 Rule With a Worked Example

Updated October 20, 20262 min read

Lenders don't ask how much house you want; they ask how much of your income the payment will take. The classic guideline is the 28/36 rule.

The 28/36 rule

  • 28%: total monthly housing cost — mortgage principal and interest, property tax, insurance and HOA — should stay under 28% of gross monthly income.
  • 36%: housing plus all other debt payments (car, student loans, card minimums) should stay under 36%.

The lower of the two limits sets your maximum housing payment. Some loan programs allow a "stretch" of 36/43.

Worked example

In the house affordability calculator: gross income $95,000, other debts $450/month, down payment $40,000, 30-year mortgage at 6.5%, property tax 1.1% a year, insurance $1,800 a year.

  • Maximum housing cost: $2,217/month (28% of $7,917).
  • That supports a home of about $320,500 with a $280,500 loan.
  • The payment splits into about $1,773 principal and interest, $294 property tax and $150 insurance.

Switching to the 36/43 stretch raises the price to about $408,000 — but leaves far less room for savings, repairs and surprises.

What moves the number most

  • Interest rate: each extra percentage point cuts the affordable price noticeably.
  • Property tax: varies hugely by location; use the real rate for the area.
  • Other debts: paying off a car loan can raise your limit under the 36% test.

Before you buy

Lender limits are maximums, not recommendations. Budget for maintenance (often 1–2% of the home's value a year), closing costs and an emergency fund. To see the full amortization schedule of the mortgage, use the loan calculator.

Try the free tool

House Affordability CalculatorUnited StatesNewHome price you can afford on your income.Loan CalculatorMonthly payment, total interest and amortization schedule.

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