How much house can I afford?

How the 28/36 rule works

Lenders don’t guess how much house you can handle — they lean on a pair of ratios. The 28/36 rule says your housing payment should stay under 28% of your gross monthly income, and all of your debt combined — the mortgage plus car loans, student loans, and credit card minimums — should stay under 36%. The housing figure isn’t just principal and interest; it’s the full PITI payment: principal, interest, property tax and insurance.

Why two caps? The 28% line keeps the home itself affordable, while the 36% line makes sure your other debts don’t crowd it out. Whichever limit you hit first is the one that sets your budget. Someone with no other debt is usually capped by the 28% housing line; someone carrying a big car payment often hits the 36% line first. The rule is deliberately conservative — it leaves room for the bills that don’t show up on a loan application.

How to use this calculator

You can pull every input straight from your pay stub and a quick rate check:

• Annual household income. Your gross, pre-tax pay — add a partner’s income if you’re buying together.
• Monthly debt payments. Car loans, credit card minimums, student loans, and any other recurring debt. These eat directly into the 36% budget.
• Down payment. The cash you’ll put toward the purchase. It comes off the loan, so it lifts the price you can reach.
• Interest rate and term. Use a current rate for your credit tier and pick a 30-, 20- or 15-year term. A lower rate or longer term buys more house per dollar of payment.
• Property tax and insurance. Property tax is entered as a yearly percentage of the home’s value (1.1% is a common middle), and insurance as an annual dollar figure. Both ride inside your monthly payment.

The tool works backward from those caps to a maximum home price, then shows your max monthly payment, the loan amount, the principal-and-interest portion, and the taxes-and-insurance portion — so you can see exactly where the money goes.

A worked example

Say you earn $90,000 a year, carry $500 in monthly debt payments, and have $40,000 to put down at a 6.5% rate on a 30-year loan. Your gross monthly income is $7,500. The 28% housing cap is $2,100; the 36% total-debt cap is $2,700, and after subtracting your $500 of other debt that leaves $2,200 for housing. The lower of the two — $2,100 — is your ceiling. Back out property tax and insurance, solve for the loan your principal and interest can support, add your $40,000 down, and you land near a $320,000 home. Notice the 28% housing line, not your other debts, is what caps you here — pay down that $500 and the price barely moves until the housing cap itself rises.

What the result leaves out

This estimate is a clean PITI ceiling, but a real closing has more moving parts. If you put down less than 20%, you’ll likely pay private mortgage insurance, which adds to the monthly bill the calculator doesn’t show. A home in an HOA or condo association carries monthly dues on top of everything. And before you get the keys you’ll owe closing costs — often 2% to 5% of the price — for the appraisal, title, and lender fees. Lenders also weigh your credit score and the cash reserves you keep after closing. Treat the number here as the top of your range, then budget those extras down from it.

How to afford more house

If the result comes in low, you have three real levers. Raise your down payment and you shrink the loan, which lifts the price your fixed payment can reach — and crossing 20% drops PMI entirely. Cut your monthly debts and you free up room under the 36% cap, though that only helps if your other debt — not the 28% housing line — is what’s holding you back. Or stretch the term: a 30-year loan has a lower payment than a 15-year one, so it qualifies you for more house, but you’ll pay far more interest over the life of the loan and build equity more slowly. More house isn’t the same as more wealth — a bigger payment you can technically carry still crowds out saving and investing.

Related tools & guides

Once you have a target price, run it through the mortgage calculator to see the full payment and amortization, or weigh the decision itself with the rent vs. buy calculator. Already own and eyeing a lower rate? Try the refinance calculator. To check what your paycheck actually clears before housing, use the take-home pay calculator, or browse the full set of money calculators. For the costs that hide behind the sticker price, read our guide to the hidden costs of buying a home, and before you commit, see whether a home is really a good investment. This tool is for education, not financial advice.