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

You can afford more house than you think you can afford. You can also afford less. The 28/36 rule is what separates those two truths from each other — and it's the first number a mortgage lender runs before they even look at your credit score.

What the rule actually says

The 28/36 rule has two parts. The first: spend no more than 28 percent of your gross monthly income on housing costs — that's your mortgage payment, property taxes, insurance, and HOA fees if you have one, all added together. The second: spend no more than 36 percent of your gross monthly income on all debt combined — that includes the housing costs plus your car payment, student loans, credit cards, everything.

Gross income means before taxes. If you earn 60 thousand dollars a year, that's 5 thousand dollars a month gross, before the IRS takes its cut.

Where it comes from and why it matters

Mortgage lenders didn't invent this rule to be mean — they use it because it predicts default. If your housing cost alone eats more than 28 percent of your income, you don't have enough cushion when something breaks. If your total debt load (including housing) hits 36 percent, you're one job loss or medical emergency away from missing payments. The rule exists because historically, people above those thresholds default more often.

It's not a law. It's a pattern that's held up for decades.

How to use it to figure out your number

Let's say you earn 5,000 dollars gross per month. Twenty-eight percent of that is 1,400 dollars. That's your housing budget. Subtract your other monthly debts — if you have a 300-dollar car payment and 200 dollars in student loans, that's 500 dollars. So your 36-percent threshold is 1,800 dollars total. Subtract your car and student loans (500 dollars), and you're left with 1,300 dollars for your mortgage payment, taxes, insurance, and HOA.

A 1,300-dollar housing budget typically means you can afford a house in the 250 to 300 thousand range, depending on interest rates and your down payment — the math is different in every market.

The 28/36 rule isn't a permission slip. It's a warning light that tells you how much breathing room you actually have.

Why it's not the whole story

The rule assumes stable income and predictable expenses. If you're self-employed or your income varies, you might want to be more conservative. If you have a spouse whose income will stay stable even if one of you loses a job, you can sometimes stretch a bit. If you have dependents or aging parents you help support, or if your area has genuinely no affordable housing (most expensive markets), you might have to ignore this rule because ignoring it is the only way to get a roof over your head — that's a different problem.

The rule works best as a starting point, not as a ceiling.

The actual application

Use your 28/36 math to set your personal housing budget, then shop for houses in that range. When you get a pre-approval letter from a lender, the number they pre-approve you for will usually line up with or slightly exceed your 28 percent threshold — that's them running the same calculation. If the lender pre-approves you for way more, you can take it, but that doesn't mean you should. The 28/36 rule exists because people who stretch beyond it end up stressed.

The takeaway