Home Affordability: The 28/36 Rule Explained
Learn how lenders determine your home buying budget, what the 28/36 rule means for your mortgage and how to stress-test the payment.
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One of the most common questions homebuyers ask is "how much house can I afford?" The answer comes down to a simple ratio: the 28/36 rule.
The 28/36 Rule Explained
Lenders use two key ratios to determine your borrowing capacity:
- Front-end ratio (28%): Your monthly housing costs (mortgage, taxes, insurance, HOA) should not exceed 28% of your gross monthly income
- Back-end ratio (36%): Your total monthly debt payments (housing + car loans, student loans, credit cards, etc.) should not exceed 36% of your gross monthly income
Example Calculation
If your household earns $8,000/month gross: - Max housing payment: $8,000 × 28% = $2,240 - Max total debt payments: $8,000 × 36% = $2,880
Other Factors Lenders Consider
- Down Payment: Minimum 3-5% for conventional, 0% for VA, 3.5% for FHA
- Credit Score: Minimum 620 for conventional, 580 for FHA
- Debt-to-Income Ratio: Some lenders allow up to 43-50% with compensating factors
- Reserves: 2-6 months of mortgage payments in liquid assets
Don't Forget These Costs
- Property taxes (typically 0.5-2.5% of home value annually)
- Homeowners insurance ($800-$1,500/year)
- PMI (if down payment <20%)
- Maintenance (budget 1-2% of home value annually)
Use our House Affordability Calculator to see what you can afford, and our Mortgage Calculator to estimate your monthly payments.
Related reading: Mortgage Rates 2026: A Homebuyer Guide | Mortgage Payments by State 2026, Ranked
By AtlasCalcs Editorial Team · 2026-06-25 · 7 min read
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