How Much House Can You Actually Afford? The 28/36 Rule Explained

A lender telling you what you're "approved for" and knowing what you can actually afford are two very different numbers. Lenders maximize what they'll let you borrow; the 28/36 rule helps you figure out what won't stretch your budget thin.

What is the 28/36 rule?

It's a simple budgeting guideline used by lenders and financial planners alike:

• 28% front-end ratio: Your monthly housing costs (mortgage principal, interest, property tax, and insurance — often called PITI) shouldn't exceed 28% of your gross monthly income.
• 36% back-end ratio: Your total monthly debt payments — housing plus car loans, student loans, credit cards, and any other recurring debt — shouldn't exceed 36% of gross monthly income.

Worked example

Say your household gross income is $8,000/month.

• 28% front-end limit: $2,240/month for housing costs
• 36% back-end limit: $2,880/month for total debt, including housing

If you're already paying $400/month toward a car loan and $200/month toward student loans, that leaves only $2,280/month for housing under the 36% rule — tighter than the 28% front-end number would suggest on its own. Whichever limit is lower is the one that actually constrains you.

Why lenders will often approve more than this

Many mortgage lenders will qualify you up to a 43%–50% back-end ratio, especially with strong credit. That's not a recommendation — it's the outer edge of what they're willing to risk. Being "approved" for a $2,900/month payment doesn't mean it fits comfortably alongside groceries, retirement savings, and an emergency fund.

What counts toward your housing cost

Don't just budget the mortgage payment. Your full monthly housing cost typically includes:

• Principal and interest
• Property taxes
• Homeowners insurance
• Private mortgage insurance (PMI), if your down payment is under 20%
• HOA fees, if applicable

Adjusting the rule for your situation

The 28/36 rule is a starting point, not a hard law. Reasons to lean more conservative than 28%:

• Variable or commission-based income
• Living in a high cost-of-living area with volatile property tax reassessments
• Planning for kids, a career change, or other near-term income disruption

Reasons some buyers stretch slightly beyond 28%:

• No other debt at all, keeping the 36% back-end ratio well within range
• A large, stable emergency fund already in place
• Strong income growth expected in the near term

Run your own numbers

Your comfortable number depends on your full financial picture — not just the two ratios. Use Finzony's Home Affordability Calculator to see what you can afford based on your actual income and debts, and the Mortgage Calculator to see how today's rates affect your monthly payment at different loan amounts.

This article is for educational purposes only and does not constitute financial advice. Mortgage rates, lending standards, and tax treatment vary by lender and location — consult a mortgage professional for guidance specific to your situation.