How Much House Can I Afford?
Last updated October 2026
Quick answer
Most lenders use the 28/36 rule: no more than 28% of your gross monthly income toward housing costs, and no more than 36% toward all debt combined, including housing. On a $100,000 salary ($8,333/month gross) with $500/month in existing debt, that works out to about $2,500/month for housing — which affords roughly a $345,000 home with 10% down at 6.25%. Change the existing debt to $1,000/month, and the affordable price drops to about $275,000 — a $70,000 swing from $500 of monthly debt.
The 28/36 rule, applied
| Gross annual income | $100,000 |
|---|---|
| Gross monthly income | $8,333.33 |
| 28% (max housing payment) | $2,333.33 |
| 36% (max total debt payment) | $3,000.00 |
| Existing monthly debt (car + credit card) | $500 |
| Max housing payment (36% rule, the binding one here) | $2,500 |
The 36% rule is usually the tighter constraint once you have any other debt, which is why it typically drives the real number.
Turning the budget into a home price
A $2,500 monthly housing budget doesn't translate directly into loan size — taxes, insurance, and PMI eat into it first:
| Home price | $345,000 |
|---|---|
| Down payment (10%) | $34,500 |
| Loan amount | $310,500 |
| Principal & interest (6.25%, 30 yr) | $1,912 |
| Property tax (est. 1.1%/yr) | $316 |
| Homeowners insurance (est.) | $125 |
| PMI (10% down, ~0.55%) | $143 |
| Total monthly housing payment | $2,496 |
That lands right at both limits: a 28.2% front-end ratio and a 36% back-end ratio. This is the number a $2,500 budget actually buys once real costs are included — not the loan amount alone.
Why existing debt hits so hard
Take the same income and drop existing debt from $500 to $1,000/month. The max housing payment falls from $2,500 to $2,000 — and the affordable home price falls from $345,000 to about $275,000. That $500 of monthly debt costs roughly $70,000 of home-buying power — a leverage ratio worth sitting with before financing a car or carrying a credit card balance while house hunting.
Things to consider
- Lenders often approve more than 36%. FHA, VA, and strong conventional applicants can get approved up to 43%–50% DTI with compensating factors like reserves or excellent credit — see What Is Debt-to-Income (DTI) Ratio?. Qualifying for a payment isn't the same as it being comfortable.
- Your down payment size changes everything above. More down means less loan, less PMI, and a higher affordable price for the same monthly budget — see How Much Should You Put Down on a House?.
- Property tax rates vary enormously by location — from under 0.5% to over 2% of home value annually. The 1.1% used here is a rough national midpoint, not your number.
- This is affordability, not pre-approval. A lender's actual number depends on documented income, credit, and underwriting — see Pre-Approval vs. Pre-Qualification for the next real step.
- Closing costs are separate from everything above — budget another 2%–5% of the purchase price in upfront cash.
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Frequently asked questions
What is the 28/36 rule?
A common lending guideline: spend no more than 28% of your gross monthly income on housing costs (principal, interest, taxes, insurance), and no more than 36% on total debt payments including housing.
Can lenders approve me for more than 36% DTI?
Yes — many go up to 43%–50% with strong credit, cash reserves, or certain loan programs. Being approved at a higher DTI doesn't automatically mean the payment fits comfortably into your budget.
Does paying off debt before buying help me afford more house?
Significantly. As shown above, $500 less in monthly debt can translate to roughly $70,000 more in home-buying power at the same income and rate.
Should I use gross or net income for affordability?
Lenders calculate DTI using gross (pre-tax) income. Many personal-finance approaches, like the 25%-of-take-home-pay rule, use net income instead for a more conservative target.
Does this estimate include closing costs?
No. This covers ongoing monthly affordability only. Closing costs are a separate upfront cash requirement, typically 2%–5% of the purchase price.
Related guides
What Is PMI (Private Mortgage Insurance)?
What PMI costs by down payment size, how it's calculated, and the two ways it legally comes off your loan.
Read moreHow Much Should You Put Down on a House?
Every down payment option from 0% to 20%, side by side, with the monthly cost of each.
Read moreMortgage Pre-Approval vs. Pre-Qualification: What's the Difference?
What each one actually requires, how long it takes, and why only one of them gets an offer taken seriously.
Read moreWhat Is Debt-to-Income (DTI) Ratio?
Front-end vs. back-end DTI, what actually counts as debt, and the real limits by loan program.
Read moreFigures on this page are generated from the same amortization engine that powers the MortMetrix dashboard, using the example loan stated in each table. They are estimates based on a fixed-rate loan at a constant rate and are not your actual loan terms. This is educational information, not financial advice.