How the 28/36 rule works
The 28/36 rule is a long-standing rule of thumb for how much of your income should go to a mortgage:
- Housing limit (front-end, 28%): your full monthly housing cost (principal, interest, property tax, insurance, PMI, and HOA dues) stays at or below 28% of your gross monthly income.
- Total-debt limit (back-end, 36%): housing plus your other monthly debt payments stays at or below 36% of gross monthly income.
The calculator uses whichever limit is lower as your monthly housing budget, then works backward to the highest price whose full monthly cost fits it.
It's a conservative guideline, not a lender's maximum. Many lenders approve higher debt-to-income ratios, and you can change both ratios under Assumptions to see the difference. A bigger approval doesn't mean the payment will feel comfortable.
The formula
Budget = lower of (28% × monthly income) and (36% × monthly income − monthly debts) Budget = (price − down payment) × payment per loan dollar + price × (tax % + insurance %) ÷ 12 + PMI + HOA
The payment per loan dollar comes from the standard fixed-rate formula for your rate and term. PMI is added only when the down payment is less than 20% of the price, as a yearly percentage of the loan. Each part of the cost rises in a straight line as the price goes up (with PMI switching on below 20% down), so the calculator solves for the price exactly instead of estimating it.
Worked example
A household earning $120,000 a year ($10,000 a month) with $500 of monthly debt payments, $50,000 saved for a down payment, and a 7% 30-year rate:
- Housing limit: 28% × $10,000 = $2,800
- Total-debt limit: 36% × $10,000 − $500 = $3,100
- The housing limit is lower, so the budget is $2,800 a month.
- With property tax at 1.1% and insurance at 0.6% of the price per year, the highest price that fits is about $363,889.
- That's 13.7% down, so PMI of about $196 a month is part of the $2,800 total.
What this estimate leaves out
- Closing costs (often 2% to 5% of the loan) and the cash cushion lenders like to see after closing.
- Your real rate, which depends on your credit score, down payment, and loan type.
- Local property tax and insurance, which can be far from the national averages used here. Change them under Assumptions.
- Everything else in your budget: childcare, savings goals, and the repairs every home needs. This is not a pre-approval or a loan offer.
Want to see whether a specific house still works if rates, taxes, or your income change? The affordability stress test (sign-in required) is a free beta that runs those scenarios over time.
Frequently asked questions
What is the 28/36 rule?
It's a guideline that says your monthly housing cost should be no more than 28% of your gross monthly income, and your housing cost plus other debt payments no more than 36%. It's a conservative starting point, not a limit lenders are required to use.
Will a lender approve me for more than this?
Often, yes. Many loan programs allow total debt payments well above 36% of income, sometimes 45% to 50% with strong credit or savings. In the example on this page, letting housing and debts reach 43% of income would raise the price from about $363,889 to about $478,902. Being approved for more isn't the same as the payment feeling comfortable, so it's worth deciding your own budget before you shop.
Does this include PMI?
Yes. When your down payment is less than 20% of the price, the calculator adds PMI at the rate under Assumptions (0.75% of the loan per year by default). That's part of the monthly budget, so it lowers the price you can afford.
Which income should I enter?
Your household's gross income: the total yearly pay before taxes and deductions for everyone who will be on the loan. That's what the 28/36 guideline and lenders use. If your take-home pay is much lower because of retirement savings or other deductions, a lower budget may feel more comfortable.
What counts as monthly debt?
Minimum required payments on car loans, student loans, credit cards, and personal loans, plus child support or alimony. Don't include your current rent (it goes away when you buy), utilities, phone bills, or groceries.
How does a bigger down payment change what I can afford?
It raises the price in two ways: the cash itself, and a smaller loan payment. Reaching 20% down also removes PMI. In the example on this page, going from $50,000 to $80,000 down raises the estimate from about $363,889 to about $400,000.
Go further
- Buyer CheckA realistic budget from your income, debts, credit, and down payment, with a pre-approval checklist.
- How to read a Loan EstimateWhat each section of a lender's quote means once you start shopping.
- Compare Loan EstimatesGot offers from several lenders? See which one really costs less.
- See a sample reportWhat a Mortgage Lens report looks like before you buy one.
More free calculators
- Mortgage payment calculatorYour full monthly payment: principal, interest, property tax, insurance, PMI, and HOA dues.
- Refinance break-even calculatorYour new payment, when closing costs pay for themselves, and whether you come out ahead.
- Rent vs. buy calculatorWhich comes out ahead over the years you plan to stay, counting equity, upkeep, and investment returns.