How Much House Can I Afford?
Updated July 9, 2026 · SmartRates Editorial Team
⚡ In short
A common starting rule is that your mortgage payment shouldn't exceed 28% of your gross monthly income, and your total debt payments (including the mortgage) shouldn't exceed 36% — but your real number also depends on your down payment, interest rate, and other costs like property tax, insurance, and HOA fees.
📌 Key facts
- 28% front-end ratio = max housing payment as a share of gross monthly income
- 36% back-end ratio = max total debt payments (housing + all other debt) as a share of gross monthly income
- Property tax, homeowners insurance, and PMI (if your down payment is under 20%) all count toward your housing payment, not just principal and interest
- A pre-approval from a lender reflects your actual documented income and debts — more reliable than any online rule of thumb
🏛️ Official sources
Try it yourself: Home Affordability Calculator →
Calculate a price range from income, debts, and down payment.
The 28/36 rule, explained
Most conventional lenders use a version of the '28/36 rule' to size up how much mortgage you can responsibly take on. The 28% front-end ratio caps your total monthly housing payment — principal, interest, taxes, and insurance (often abbreviated PITI) — at 28% of your gross (pre-tax) monthly income. The 36% back-end ratio caps your total monthly debt payments, including that housing payment plus car loans, student loans, minimum credit card payments, and any other debt, at 36% of gross income.
These aren't hard legal limits — some loan programs allow back-end ratios well above 36%, especially for borrowers with strong credit or larger down payments — but they're a reasonable, conservative starting point for estimating what's actually sustainable rather than just what a lender might approve you for.
Working through an example
Say a household earns $8,000 a month before taxes. The 28% front-end limit puts the maximum housing payment at $2,240 a month. If that household also pays $400 a month toward a car loan and student loans, the 36% back-end limit caps total debt at $2,880 a month — meaning the mortgage payment portion would need to come down to about $2,480 to stay under the back-end limit, even though the front-end rule alone would have allowed $2,240.
Whichever number is lower between the two rules is generally the more binding constraint — the housing payment can't exceed 28% of income on its own, but existing debt can push the affordable housing payment even lower.
Costs beyond principal and interest
Affordability math based only on principal and interest omits real recurring costs. Property taxes and homeowners insurance are part of nearly every monthly payment and vary significantly by location. A down payment under 20% of the purchase price on a conventional loan requires private mortgage insurance (PMI) until 20% equity is reached, adding a monthly cost on top of the loan itself. Homes in a condo or planned community may also carry monthly HOA dues factored into the budget the same way debt payments are.
How down payment size changes the number
A larger down payment lowers the loan amount — and therefore the monthly principal and interest — and, once it reaches 20% on a conventional loan, eliminates the PMI requirement. Both effects mean the same gross income supports a higher purchase price with a larger down payment.
A calculator estimate isn't a pre-approval
Rules of thumb and online calculators narrow down a price range using self-reported figures. A lender's pre-approval verifies income, debts, assets, and credit directly through documentation, and can produce a different number — higher or lower — than a self-reported estimate. Pre-approval typically involves submitting pay stubs, tax returns, and bank statements, which the lender uses to confirm the income and asset figures a calculator estimate would otherwise take at face value.
Interest rate's effect on affordability
The interest rate on the mortgage directly affects the monthly principal-and-interest payment for a given loan amount, which means the same target monthly payment supports a smaller loan amount when rates are higher and a larger loan amount when rates are lower. Because rates can change between when a buyer starts house-hunting and when they close on a loan, some lenders offer a rate lock, which fixes the rate for a specified period during the transaction.
Fixed-rate vs. adjustable-rate loans and affordability
A fixed-rate mortgage keeps the same interest rate, and therefore the same principal-and-interest payment, for the entire loan term. An adjustable-rate mortgage (ARM) typically offers a lower initial rate for a set period before adjusting periodically based on a benchmark index, which means the affordability calculation for an ARM should account for how the payment could change after the initial fixed period ends, not just the introductory payment.
How loan term length affects the monthly figure
A 30-year loan term produces a lower monthly principal-and-interest payment than a 15-year term for the same loan amount and rate, since the balance is spread across more payments, though the 15-year term results in less total interest paid over the life of the loan. This tradeoff between monthly affordability and total interest cost is a separate consideration from the 28/36 ratios themselves, since the ratios apply to whichever monthly payment results from the term selected.
Frequently Asked Questions
How much down payment is required to buy a house?+
Conventional loans allow as little as 3% down for qualifying first-time buyers, and FHA loans allow 3.5% down. A down payment under 20% on a conventional loan requires PMI until 20% equity is reached.
Does the affordability calculation include property tax and insurance?+
Lender affordability calculations use total PITI — principal, interest, property taxes, and homeowners insurance — as the housing payment figure, not just the loan payment alone.
What debt-to-income ratio do lenders commonly allow?+
Many conventional loans cap the back-end DTI around 43–45%, while FHA and other government-backed programs sometimes allow higher ratios, subject to other underwriting factors.
Does a mortgage rate lock guarantee the final interest rate?+
A rate lock generally holds the quoted rate for a specified period during the loan process, subject to the lock's specific terms and conditions, protecting the borrower from rate increases during that window.
How does an adjustable-rate mortgage affect long-term affordability?+
An ARM's rate — and therefore the payment — can change after an initial fixed period, based on a benchmark index, so long-term affordability planning for an ARM should account for potential payment changes after that initial period.