Use the 28/36 rule: spend no more than 28% of your gross monthly income on housing (mortgage, taxes, insurance) and no more than 36% on total debt (housing plus car, student loans, credit cards). On a $6,000/month gross income, that's about $1,680 for housing and $2,160 for all debt. A quick shortcut: you can usually afford a home priced around 3–4× your annual income. But lenders may approve you for more (up to 45–50% DTI) — qualifying for more doesn't mean you should borrow it.
The 28/36 Rule — Your Affordability Guardrail
The 28/36 rule is the guideline lenders and financial planners use to gauge how much house you can comfortably afford. It's built from two ratios, and the goal of staying within both is to leave room in your budget for savings, emergencies, and actually enjoying life — not just making the mortgage payment.
The 28/36 rule at a glance
"Gross" means your income before taxes. So if you earn $6,000/month before taxes, the front-end limit is $1,680 (28% × $6,000) and the back-end limit is $2,160 (36% × $6,000). If you already pay $400/month toward a car loan and student loans, that leaves $1,760 for housing under the back-end test — but the front-end test caps you at $1,680, so $1,680 is your number. You use whichever limit is lower.
How to Calculate What You Can Afford — Step by Step
Here's the calculation worked out for a household earning $6,000/month gross with $400/month in existing debt payments:
Affordability math — $6,000/month gross income
That $1,680/month has to cover the entire housing payment — not just principal and interest, but property taxes and insurance too. After accounting for those, the principal-and-interest portion might be around $1,250–$1,350, which at 2026 interest rates supports a home price roughly in the $250,000–$320,000 range with a moderate down payment. The exact figure shifts with your down payment, interest rate, and local property taxes.
The fast shortcut: If you don't want to do the full calculation, a widely used rule of thumb is that you can afford a home priced around 3 to 4 times your annual gross income. Earning $90,000/year? That's roughly a $270,000–$360,000 home. It's a rough estimate — the 28/36 rule is more accurate because it accounts for your existing debts — but it's a quick sanity check before you start browsing listings.
How Much House by Income — Real Examples
These examples apply the 28/36 rule's 28% housing limit across income levels. The home price range assumes a moderate down payment and typical 2026 rates, taxes, and insurance — your numbers will vary with those inputs.
| Annual income | Gross/month | Max housing (28%) | Rough home price |
|---|---|---|---|
| $50,000 | $4,167 | $1,167 | $170k–$210k |
| $75,000 | $6,250 | $1,750 | $260k–$320k |
| $100,000 | $8,333 | $2,333 | $350k–$430k |
| $125,000 | $10,417 | $2,917 | $440k–$540k |
| $150,000 | $12,500 | $3,500 | $530k–$650k |
Notice how much the range widens at higher incomes — that's because once taxes and insurance are covered, more of each additional dollar flows to principal and interest, which buys disproportionately more house. These are estimates to orient you, not promises; a mortgage calculator with your real rate and local tax figures will give you a precise number.
What's Actually in a Mortgage Payment — PITI
The single biggest reason buyers misjudge affordability is forgetting that the monthly payment is more than principal and interest. Lenders summarize the real payment as PITI:
And even PITI isn't the whole story. True homeownership costs also include:
- HOA fees — if the home is in an association, this can add $100–$500+/month.
- Utilities — often higher than renting, especially in a larger home.
- Maintenance and repairs — budget about 1% of the home's value per year. On a $300,000 home, that's $3,000/year, or $250/month set aside.
- PMI — private mortgage insurance, required when your down payment is under 20%, typically 0.5–1.5% of the loan per year.
A buyer who budgets only for principal and interest can be hundreds of dollars a month short of the real cost. Always run the full PITI plus maintenance before deciding what you can afford.
Why You Shouldn't Borrow the Maximum
Here's the trap: lenders frequently approve borrowers for more than the 28/36 rule suggests. Conventional loans can allow a debt-to-income ratio up to 45–50%, and FHA loans can go even higher. So you might get approved for a payment that eats 45% of your income — and then discover there's nothing left for savings, retirement, or emergencies.
"House-poor" is a real risk. Being house-poor means you can technically make the mortgage payment, but it consumes so much of your income that you can't save, invest, handle a surprise expense, or enjoy your life. The home you can qualify for and the home you can comfortably afford are often two very different numbers. Many financial advisers recommend staying within the 28/36 rule even when a lender offers you more — the breathing room is worth more than the extra square footage.
What Affects How Much You Can Afford
Five factors move your affordability number up or down. Improving the ones you control before you buy can meaningfully expand what you can comfortably purchase:
- Down payment. A bigger down payment means a smaller loan and lower monthly payment — and 20% down eliminates PMI. See how to save for a house for a realistic plan.
- Interest rate. A lower rate dramatically increases how much house your payment buys. Your credit score directly drives your rate — improving it before applying can save tens of thousands over the loan.
- Existing debt. Car loans, student loans, and credit card payments all count against your 36% back-end limit. Paying down debt first frees up borrowing power.
- Property taxes and insurance. These vary enormously by location — a home in a high-tax county costs more per month than the same-priced home elsewhere.
- Loan term. A 30-year loan has lower monthly payments than a 15-year (but more total interest). The term changes your monthly affordability.
Before you shop, get pre-approved. A mortgage pre-approval (which uses a soft or hard credit check) tells you the actual number a lender will offer based on your real finances — far more accurate than any rule of thumb. Use the 28/36 rule to decide what you want to spend, then get pre-approved to confirm what you can spend. Shop at or below your comfortable number, not the lender's maximum.
Frequently Asked Questions
How much house can I afford on my salary?
A common guideline is the 28/36 rule: no more than 28% of gross monthly income on housing, 36% on total debt. On $6,000/month ($72,000/year), that's about $1,680 for housing and $2,160 for all debt — typically supporting a $250,000–$320,000 home depending on rates, down payment, and taxes. A rougher shortcut: you can often afford a home priced around 3–4× your annual income.
What is the 28/36 rule?
A guideline for how much house you can afford. The front-end ratio says housing costs (principal, interest, taxes, insurance — PITI) shouldn't exceed 28% of gross monthly income. The back-end ratio says total monthly debt — housing plus car loans, student loans, and credit cards — shouldn't exceed 36%. Staying within both leaves room for savings, emergencies, and other goals instead of becoming house-poor.
How much income do I need to buy a $400,000 house?
Typically a gross income around $105,000–$130,000/year, depending on down payment, interest rate, taxes, and other debts. The total monthly payment on a $400,000 home with 10% down at current rates often lands around $2,800–$3,200; dividing that by 0.28 gives the income the front-end ratio requires. Property taxes and insurance vary widely by location, so run your specific numbers.
Should I borrow the maximum amount a lender approves?
Usually not. Lenders often approve more than the 28/36 rule suggests — conventional loans allow up to 45–50% DTI, FHA even higher. But qualifying for more doesn't mean you should take it. Borrowing the max can leave you house-poor — able to make the payment but with nothing left for savings, retirement, or emergencies. Many advisers recommend staying within 28/36 even when you qualify for more.
What costs are included in a monthly mortgage payment?
Often summarized as PITI: Principal, Interest, Taxes (property taxes, which vary by location), and Insurance (homeowners, plus PMI if your down payment is under 20%). Beyond PITI, real costs include HOA fees if applicable, utilities, and maintenance (budget about 1% of the home's value per year). Many buyers underestimate affordability by looking only at principal and interest.
Sources & References
- Rocket Mortgage — Home Affordability Calculator (2026): 28/36 rule; conventional DTI up to 45%
- Zillow — Affordability Calculator (January 2026): 36/43 DTI; example calculations
- U.S. Bank — Affordability Calculator: 28/36 rule explained, credit score impact
- Reach Home Loans — How Much House Can I Afford Guide (February 2026): conventional up to 50% DTI, FHA up to 56.9%
- The Motley Fool — The 28/36 Rule: front-end and back-end ratio breakdown
- Hometap — The 28/36 Rule Explained (December 2025): worked examples