How Much House Can I Afford? The 28/36 Rule Explained
Lenders and planners use a simple rule of thumb to judge how much home you can afford. It is not a guarantee, but it is a good first check before you start looking.
The 28/36 rule
- 28% rule: your monthly housing cost (mortgage principal and interest, property tax and insurance) should not be more than about 28% of your gross monthly income.
- 36% rule: your total monthly debt payments (housing plus car loans, student loans and credit cards) should not be more than about 36% of gross monthly income.
Worked example: $100,000 income
| Item | Monthly |
|---|---|
| Gross monthly income | $8,333 |
| 28% limit for housing | $2,333 |
| 36% limit for all debt | $3,000 |
| Other debt payments (example) | $500 |
| Max housing payment (the lower limit) | $2,333 |
With 20% down, a 6.5% rate on a 30-year loan, 1% yearly property tax and $1,500 a year in insurance, a payment of $2,333 supports a home price of roughly $375,000. Those rates are examples only. Your rate, taxes and insurance will differ, so test your own numbers in the mortgage calculator.
Other things that matter
- Down payment and closing costs. Plan for cash beyond the down payment.
- PMI. Private mortgage insurance usually applies when you put down less than 20%. Our calculator does not include it.
- Maintenance. A common rule of thumb is to set aside 1% or more of the home's value each year for repairs.
- Your real take-home pay. The 28% rule uses gross income. Check the payment against your take-home pay with the salary after tax calculator, since that is the money you actually spend.
- Emergency savings. Keep a cash cushion after buying.
Get pre-approved
Lenders use their own rules and your credit score. A pre-approval shows what a lender would actually offer. This guide is general information, not financial advice.
Last reviewed: October 2026. Figures are for tax year 2026. This guide is general information, not tax, legal or financial advice.
About the author
Hari Nepal, founder and editor of Kbtrim Salary. Hi, I'm Hari Nepal, based in Nepal. I built Kbtrim Salary to make money numbers easier to understand, with free calculators that explain how they work instead of hiding the math. I use published IRS and state tax figures and update them every year. I'm not a tax professional, so the tools give estimates, not advice. If you find a mistake, please email me at harinepal2062@gmail.com. More about this site.