How Much House Can I Afford?

The Short Answer: The 28/36 Rule

Most lenders start with the same two ratios, known as the 28/36 rule. The front-end ratio (28%) says your monthly housing cost — principal, interest, property tax and home insurance, or PITI — should be no more than 28% of your gross monthly income. The back-end ratio (36%) says your total monthly debt payments, housing included, should be no more than 36%. Whichever limit is lower caps your housing payment, and that payment caps the price of the home you can buy.

Two details matter. First, lenders use gross income — pay before taxes — not take-home pay, so a payment that looks comfortable against gross income can feel much tighter in practice. Second, the 28/36 figures are guidelines, not laws: many lenders approve borrowers above them, with conventional loans often going to a 43% to 45% back-end ratio. But approval is a ceiling, not a recommendation — just because a lender will let you borrow an amount does not mean the payment fits your life.

Worked Example: A $90,000 Salary

Take a household earning $90,000 a year, with $400 a month in other debts, a $40,000 down payment, and a 30-year fixed mortgage at 6.5%. Property taxes run at 1.2% of the home's value a year, homeowners insurance is $1,800 a year, and there are no HOA dues. Run those inputs through the Home Affordability Calculator:

Gross monthly income is $90,000 ÷ 12 = $7,500. The front-end limit is 28% of $7,500 = $2,100 a month; the back-end limit is 36% of $7,500 = $2,700, minus $400 of debts = $2,300. The front-end limit is lower, so it binds: the maximum housing payment is $2,100 a month. Working backwards from that payment, the maximum home price is $286,854.64, with a loan of $246,854.64. Here is how the $2,100 payment breaks down at that price:

Notice the PMI line. The $40,000 down payment is 13.9% of the price — below the 20% threshold — so private mortgage insurance applies at an estimated $102.86 a month. PMI protects the lender, not you, and it eats into the payment that could otherwise go toward a bigger loan. A larger down payment does double duty: it shrinks the loan and, at 20%, removes PMI entirely.

How Much House Can I Afford on My Salary?

The same calculation at three income levels, with the same assumptions as above ($400 a month in debts, $40,000 down, 6.5% for 30 years, 1.2% property tax, $1,800 a year insurance, no HOA):

At $60,000 a year, both rules give the same answer: the front-end limit (28% of $5,000) and the back-end limit (36% of $5,000 minus $400 of debts) are both $1,400 a month. At $90,000 and $120,000, the front-end rule binds. These are maximums under the lending rules, not targets — a comfortable budget may sit well below them once you count maintenance, repairs and utilities. Our guide to the mortgage payment breakdown shows where every dollar of that monthly payment goes.

The Five Things That Decide Your Number

1. Your income. Gross monthly income is the starting point for both ratios, so a raise lifts your ceiling directly. Lenders usually count stable, documented income — salary, plus regular bonuses or overtime with a track record. New or irregular income may be discounted or ignored.

2. Your monthly debts. Every debt payment — car loan, student loan, credit card minimums — comes straight off the back-end limit, and debts often become the binding constraint, as the example below shows. Paying a debt off entirely is one of the fastest ways to raise the price you qualify for.

3. The interest rate. The rate decides how much loan a given payment can carry, and small moves matter. Take the $90,000 example and change only the rate, from 6.5% to 7.11% — the average 30-year fixed rate in Freddie Mac's survey for the week ending November 12, 2026. The maximum home price falls from $286,854.64 to $274,536.25: a 0.61-point rise costs $12,318.39 of buying power. Check the current mortgage rates before running your numbers — a stale rate gives a stale answer.

4. Your down payment. A bigger down payment means a smaller loan for the same price, a smaller monthly payment, and — at 20% — no PMI. Saving longer trades time for buying power, and the trade is often worth it.

5. Property taxes and insurance. These vary enormously by location and come out of the same 28% housing budget as the loan payment. In the $90,000 example, tax and insurance take $436.85 of the $2,100 limit before a dollar goes to the loan. In a high-tax area the same income buys a smaller home; in a low-tax area, a bigger one. The Home Insurance Calculator can help estimate the insurance side for your area.

When Your Debts Set the Limit

Run the $90,000 example again with one change: $1,000 a month in debts instead of $400. The front-end limit is still $2,100, but the back-end limit is now 36% of $7,500 minus $1,000 = $1,700 a month — and the back-end rule now binds. The maximum home price drops to $235,157.33: same income, same down payment, same rate, but $600 a month more in debts costs $51,697.31 of home. The loan behind that price is $195,157.33 — principal and interest $1,233.53, tax $235.16, insurance $150 and PMI $81.32, totalling exactly the $1,700 limit.

Paying down debts before house-hunting pays twice over: it raises the price you qualify for and leaves more income free once you own. A car loan with a few payments left, or a card balance you can clear, may be worth finishing first — the Debt Payoff Calculator shows how quickly extra payments clear a balance.

The Lender's Maximum Is Not Your Comfortable Number

The 28/36 rule answers what a lender will approve. Your budget answers a different question: what payment leaves room for the rest of your life? Lenders work from gross income, but your bills come out of take-home pay. On a $90,000 salary, a $2,100 payment is 28% of gross monthly income — but after tax, it is a much larger share of what lands in your account. Run the payment against take-home pay, not salary, and see what is left.

Then count the costs outside the mortgage payment: maintenance and repairs, higher utility bills, furnishing, moving and closing costs. Lenders do not check whether you can handle a broken furnace in the first year. A useful test: if the maximum payment leaves no room to keep saving — for emergencies, retirement and the house itself — the house is too expensive, even if the lender says yes. The Budget Planner shows what the payment does to your budget before you commit. Buying below your maximum keeps your options open.

How to Afford More House

If the calculator's number is lower than the homes you want, there are honest ways to raise it. Pay down monthly debts — $600 a month less in debts was worth over $51,000 of home in the example above. Save a larger down payment, which shrinks the loan and can remove PMI at 20%. Improve your credit score before applying: a better score usually means a better rate, and a better rate means more house for the same payment. Consider a longer term — a 30-year loan has a lower payment than a 15-year loan, though you pay far more interest overall. And look at where you buy: taxes and insurance vary so much by area that the same income supports very different prices in different places. The right price is one you can still afford when life happens.

Sources: Freddie Mac Primary Mortgage Market Survey, week ending November 12, 2026 (30-year fixed 7.11%, 15-year fixed 6.45%); Consumer Financial Protection Bureau guidance on debt-to-income ratios and ability to repay; U.S. Department of Housing and Urban Development (FHA down payment and credit score requirements). All figures in this guide were produced by running the SumKitTool Home Affordability Calculator (28/36 rule; PMI estimated at 0.5% of the loan per year). Last reviewed: 13 November 2026.

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