How Much House Can I Afford? (The 28/36 Rule Explained)
"How much house can I afford?" is the first question every buyer asks — and the answer isn't just about the home price. It's about what lenders call your debt-to-income ratio (DTI) and the 28/36 rule.
Here's how to calculate it for your own salary.
The 28/36 Rule, Explained
The 28/36 rule is the industry-standard guideline lenders use to size a mortgage:
- 28% — Your monthly housing costs (mortgage, taxes, insurance, HOA) should not exceed 28% of your gross monthly income.
- 36% — Your total monthly debt (housing plus car loans, student loans, credit cards) should not exceed 36% of your gross monthly income.
These aren't hard laws — some lenders go higher — but they're the benchmark for a "safe" and approvable mortgage.
Real Examples by Salary
At $60,000 per year (gross monthly income: $5,000):
- Maximum housing payment (28%): $1,400/month
- Maximum total debt (36%): $1,800/month
At $100,000 per year (gross monthly income: $8,333):
- Maximum housing payment (28%): $2,333/month
- Maximum total debt (36%): $3,000/month
Notice how the "affordable" home price depends heavily on your interest rate, down payment, and other debts — not just your salary.
💡 Get your number: Use the RateLedger mortgage calculator to turn your target payment into a home price you can actually afford.
What Lenders Actually Look At
A mortgage approval isn't just about income. Lenders check several factors together:
- Debt-to-income ratio (DTI) — your monthly debts divided by gross income. Most conventional lenders cap DTI around 43–45%.
- Credit score — higher scores unlock lower rates, which directly raises how much house you can afford.
- Down payment — a bigger down payment means a smaller loan and a smaller payment.
- Cash reserves — lenders want to see savings left over after closing.
The Difference Between "Approved" and "Comfortable"
Here's the thing lenders won't tell you: just because you're approved for it doesn't mean you should borrow it. A lender might approve you at 43% DTI, but living at that limit leaves no room for emergencies, repairs, or life.
A good rule of thumb: aim for the 25–28% range on housing, and keep total debt well under 36%. Your future self will thank you.
3 Steps to Calculate Your Number
- Take your gross monthly income and multiply by 0.28 — that's your target housing payment.
- Subtract your other monthly debts (car, student loans, cards) from 36% of income to see what's left for housing.
- Plug that payment into a mortgage calculator to find the matching home price at current rates.
Frequently Asked Questions
How much house can I afford on $50k a year? At $50,000 gross ($4,167/month), the 28% guideline suggests a housing payment up to about $1,167/month. The exact home price depends on your rate, down payment, and taxes.
What is a good debt-to-income ratio for a mortgage? For most conventional loans, lenders prefer a DTI of 36% or lower, with 43% typically being the maximum. A lower DTI gets you better rates and more approval options.
Does my credit score affect how much house I can afford? Yes, significantly. A better score lowers your interest rate, which lowers your monthly payment — meaning the same income can buy a more expensive home.
What's the difference between gross and net income for affordability? Lenders use gross income (before taxes) for the 28/36 rule. For your personal budget, use net income (take-home pay), which is what you actually have to spend.
Stop guessing. Open the RateLedger mortgage calculator and see exactly how much home fits your budget.