How much house can I afford? The 28/36 rule, explained
A common rule is to keep your full housing payment at or below 28% of gross monthly income and all debt payments at or below 36%. On $100,000 a year with $500 of other monthly debts and $40,000 down, that works out to a home of about $318,145 at today's 7.24% average 30-year rate, a payment of about $2,333 a month.
Conventional lenders may approve more, up to about $475,727 here, by allowing total debts of up to 50% of income. Property taxes, insurance, your down payment and the rate move the answer by tens of thousands of dollars.
How the 28/36 rule works
The rule of thumb uses two debt-to-income ratios, both measured against gross (pre-tax) monthly income:
- Housing ratio (28%): the full monthly housing payment, meaning principal, interest, property tax, homeowners insurance, mortgage insurance and any HOA dues.
- Total debt ratio (36%): the housing payment plus other recurring debt payments, such as car loans, student loans, credit card minimums, leases, and alimony or child support.
Whichever limit is lower sets your maximum payment. On $100,000 a year, gross monthly income is $8,333. 28% of that is $2,333. 36% is $3,000, and after $500 of other debts that leaves $2,500 for housing. The lower figure, $2,333, is the payment to plan around.
From a payment to a price
Only part of that payment goes to the loan. At the national averages, a $318,145 home with $40,000 down breaks down like this:
| Part of the payment | Monthly |
|---|---|
| Principal and interest ($278,145 loan, 30 years at 7.24%) | $1,896 |
| Property tax | $236 |
| Homeowners insurance | $114 |
| Private mortgage insurance | $88 |
| Total | $2,333 |
Property tax at 0.89% of value and insurance at $4.29 per $1,000 a year, the U.S. medians from the Census Bureau; PMI because the down payment is under 20%.
What you can afford at different incomes
| Household income | Comfortable price (28/36) | Monthly payment | Lender maximum |
|---|---|---|---|
| $50,000 | $160,800 | $1,000 | $230,496 |
| $75,000 | $251,121 | $1,750 | $353,581 |
| $100,000 | $318,145 | $2,333 | $475,727 |
| $150,000 | $455,680 | $3,500 | $726,304 |
| $200,000 | $596,004 | $4,667 | $872,750 |
Conventional 30-year loan at 7.24%, $40,000 down, $500 of other monthly debts, national average tax and insurance. The lender maximum allows total debts up to 50% of income and stops at the 2026 conforming loan limit.
At lower incomes the 36% limit usually binds first: on $50,000, $500 of other debts leave room for a payment of only $1,000, less than 28% of income.
Run your own numbers, with your state's taxes and insurance, your credit score and other loan types.
Open the calculatorWhat changes the answer
Your mortgage rate
On $100,000 a year, a rate one point lower raises the comfortable price by about 8%, and one point higher lowers it by about 7%:
| 30-year rate | Comfortable price | Lender maximum |
|---|---|---|
| 6.24% | $342,566 | $513,565 |
| 7.24% | $318,145 | $475,727 |
| 8.24% | $296,613 | $442,307 |
Your down payment
A bigger down payment raises the price you can afford, though by a little less than the extra cash because property tax and insurance grow with the price. Once it reaches 20% of the price, private mortgage insurance drops away and frees more of the payment for the loan.
| Down payment | Comfortable price | Lender maximum |
|---|---|---|
| $20,000 | $298,002 | $454,021 |
| $40,000 | $318,145 | $475,727 |
| $80,000 | $363,719 | $522,867 |
Your other debts
Monthly debt payments come out of the 36% (or 50%) budget. On $100,000 a year, $500 of debts still fits under the 28% housing limit, so the comfortable price does not move, but $1,000 a month cuts it to $277,647, and every dollar of debt lowers the lender maximum.
| Other monthly debts | Comfortable price | Lender maximum |
|---|---|---|
| $0 | $318,145 | $535,865 |
| $500 | $318,145 | $475,727 |
| $1,000 | $277,647 | $415,588 |
Where you buy
Property tax and insurance come out of the same payment. On $100,000 a year, the comfortable price ranges from about $284,940 in Illinois, where property tax averages 1.92% of value, to about $348,141 in Hawaii, at 0.27%. Every state has its own page with these costs built in.
Limits for other loan types
- Conventional: Fannie Mae allows total debt up to 50% of income for loans approved through its automated underwriting, and 36% for manually underwritten loans, or up to 45% for borrowers who meet its credit score and reserve requirements. It sets no separate housing limit.
- FHA: the standard guideline is 31% for housing and 43% for total debt, with higher ratios allowed with compensating factors or through automated approval.
- VA: 41% total debt is a benchmark rather than a cap; lenders also require enough residual income left over each month for the household's size and region.
- USDA: 29% for housing and 41% for total debt, with exceptions through its automated system.
Being approved for a payment is not the same as being comfortable with it. Ratios use gross income, so a payment at 28% of gross pay is often 35% or more of take-home pay. Check yours in the paycheck calculator, and leave room for maintenance, which commonly runs 1% or more of a home's value a year.
Sources
- Consumer Financial Protection Bureau, What is a debt-to-income ratio?
- Fannie Mae Selling Guide B3-6-02, Debt-to-Income Ratios
- HUD Handbook 4000.1, FHA Single Family Housing Policy (qualifying ratios)
- 38 CFR 36.4340, VA underwriting standards (debt-to-income ratio and residual income)
- Freddie Mac Primary Mortgage Market Survey (weekly average rates)
- U.S. Census Bureau, American Community Survey 2024 (property tax and home values)