What Is the 28/36 Rule?
The 28/36 rule is a simple guideline that helps you figure out how much house you can afford without sacrificing your lifestyle, savings, and sanity.
The 28% Rule
Housing costs should be ≤28% of gross monthly income
Housing costs include:
- ✓ Mortgage principal & interest
- ✓ Property taxes
- ✓ Homeowners insurance
- ✓ HOA fees (if applicable)
- ✓ PMI (if applicable)
The 36% Rule
Total debt should be ≤36% of gross monthly income
Total debt includes housing PLUS:
- ✓ Car payments
- ✓ Student loans
- ✓ Credit card minimums
- ✓ Personal loans
- ✓ Child support/alimony
⚠️ Why This Matters
Lenders will approve you for much more than the 28/36 rule suggests—often up to 43-50% DTI. But just because you CAN borrow that much doesn't mean you SHOULD. Being "house poor" (spending so much on housing you can't enjoy life) is miserable.
📱 How Much House Can You Afford? (By Income)
Here's what the 28% rule looks like at different income levels (assuming 7% rate, 10% down, average taxes/insurance):
| Annual Income | Monthly Gross | 28% Max Housing | Approx. Home Price |
|---|---|---|---|
| $50,000 | $4,167 | $1,167 | $150,000 - $175,000 |
| $75,000 | $6,250 | $1,750 | $225,000 - $260,000 |
| $100,000 | $8,333 | $2,333 | $300,000 - $350,000 |
| $125,000 | $10,417 | $2,917 | $375,000 - $430,000 |
| $150,000 | $12,500 | $3,500 | $450,000 - $520,000 |
| $200,000 | $16,667 | $4,667 | $600,000 - $700,000 |
💡 These Numbers Assume:
- • 7% mortgage rate
- • 10% down payment
- • 1.25% property tax rate
- • $150/month homeowners insurance
- • No HOA
Your actual affordability depends on your specific situation. Get pre-approved to see your real numbers.
🏠 See Your Actual Affordability
Get pre-approved to see exactly how much you can borrow based on YOUR income, credit, and debts.
Get Pre-Approved in Minutes →The 36% Check: Don't Forget Your Other Debts
The 28% rule only works if your TOTAL debt stays under 36%. Here's how to check:
📝 Calculate Your Total DTI
Divide by your gross monthly income. If it's over 36%, you need to either reduce other debts or buy a cheaper house.
🚨 Example: When 28% Doesn't Work
Income: $100,000/year ($8,333/month)
28% housing: $2,333/month
Car payment: $600/month
Student loans: $400/month
Total debt: $3,333/month = 40% DTI
This person needs to either pay off the car, reduce student loans, or buy a cheaper house to stay under 36%.
What Banks Will Approve vs What You Should Borrow
| Loan Type | Max DTI Allowed | 28/36 Rule | Difference |
|---|---|---|---|
| Conventional | 45-50% | 36% | +9-14% |
| FHA | 43-57% | 36% | +7-21% |
| VA | No strict limit | 36% | Unlimited |
| USDA | 41% | 36% | +5% |
⚠️ The Danger Zone
Just because a bank will lend you money at 50% DTI doesn't mean you should take it. At 50% DTI, half your income goes to debt payments. That leaves little for:
- ❌ Retirement savings
- ❌ Emergency fund
- ❌ Vacations and fun
- ❌ Home maintenance (1-3% of home value/year)
- ❌ Unexpected expenses
Frequently Asked Questions
What is the 28/36 rule?
The 28/36 rule says: spend no more than 28% of gross income on housing costs and no more than 36% on total debt. It's a guideline to prevent becoming "house poor."
Is the 28/36 rule outdated?
Some argue it's outdated because housing costs have risen. However, it remains a solid guideline. Lenders may approve more, but that doesn't mean you should borrow more. The rule protects your lifestyle.
What if I can't afford a house using the 28/36 rule?
Options: save a larger down payment, look in affordable areas, consider smaller homes, increase income, pay off debts, or wait for rates to drop. Don't stretch beyond the rule.
Should I use gross or net income?
The 28/36 rule uses GROSS income (before taxes). However, some financial advisors recommend using net income for a more conservative approach. Using net income means you'll qualify for less but have more breathing room.
🏠 Ready to See Your Real Numbers?
Get pre-approved to see exactly what you can afford based on your specific income, credit, and debts.
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Sarah Mitchell
Mortgage Affordability Expert • 12+ Years Experience
Sarah helps buyers understand what they can truly afford—not just what banks will lend them.