How Much House Can I Afford? The 28/36 Rule Explained
By Calqpro Editorial Team · April 20, 2026 · 6 min read
Buying a home is the biggest financial decision most people make. Yet most buyers start by browsing Zillow instead of running the numbers. By the time they fall in love with a house, they're committed emotionally before they know if it's financially smart. Here's how to flip that process.
The 28/36 Rule: The Standard Banks Use
Lenders use two ratios to decide how much they'll let you borrow:
- Front-end ratio (28%): Your monthly housing payment (mortgage + taxes + insurance) should not exceed 28% of your gross monthly income.
- Back-end ratio (36%): All monthly debt payments combined (housing + car loans + student loans + credit cards) should not exceed 36% of gross monthly income. Some lenders allow up to 43%.
Real Numbers by Income Level
| Annual Income | Max Housing Payment (28%) | Est. Home Price (7% rate, 20% down) |
|---|---|---|
| $50,000 | $1,167/mo | ~$175,000 |
| $75,000 | $1,750/mo | ~$260,000 |
| $90,000 | $2,100/mo | ~$315,000 |
| $120,000 | $2,800/mo | ~$420,000 |
| $150,000 | $3,500/mo | ~$525,000 |
Estimates assume 7% mortgage rate, 20% down payment, 1.2% property tax, $100/mo insurance. Actual numbers vary by location.
Down Payment Changes Everything
A larger down payment means a smaller loan, lower monthly payment, and no PMI (private mortgage insurance) once you hit 20%. PMI typically adds $50–$200/month to your payment until you reach 20% equity. That directly affects how much home you can afford.
With 10% down instead of 20%, your loan is larger, your payment is higher, and you're paying PMI on top — which can reduce your buying power by $30,000–$50,000 at the same income level.
What the Rule Doesn't Account For
The 28/36 rule is a ceiling, not a target. Just because a bank will lend you that much doesn't mean you should borrow that much. Consider:
- Job security and income stability
- Planned major expenses (kids, college, elderly parents)
- Maintenance costs — budget 1–2% of home value per year
- HOA fees, which don't show up in price but add to monthly cost
A common rule of thumb among financial planners: buy a home worth no more than 3–4× your annual income if you want to stay financially comfortable.
Calculate Your Number
The fastest way to get a real answer is to plug your income, debts, and down payment into a calculator that runs the actual math.
Find out exactly what you can afford
Use the Home Affordability Calculator →