The 28/36 Rule: How Much House Can You Actually Afford?

The 28/36 rule is the most widely used guideline for mortgage affordability: spend no more than 28% of your gross monthly income on housing (the front-end ratio), and no more than 36% on all debt payments combined (the back-end ratio). It's a starting point, not a law — lenders allow higher DTIs, and personal circumstances vary widely. But understanding the 28/36 rule helps you set a realistic budget before you start shopping.

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Key Facts at a Glance
Front-end limit
28% of gross monthly income
Back-end limit
36% of gross monthly income
What counts in front-end
PITI (principal, interest, taxes, insurance)
What counts in back-end
PITI + all minimum debt payments
Lender actual limits
Often 43–50% back-end with strong credit

Frequently Asked Questions

Is the 28/36 rule still used by lenders?
The 28% front-end limit is still a common benchmark, especially for conventional loans. The 36% back-end limit is more conservative than what most lenders actually allow — Fannie Mae approves up to 45–50% back-end DTI for strong borrowers. FHA allows up to 43–50%. The 28/36 rule is better used as a personal finance guideline than as a predictor of qualification.
These can be very different numbers. Qualifying is about meeting lender requirements. Affording is about maintaining your lifestyle, saving for retirement, building an emergency fund, and handling maintenance costs without financial stress. Many financial advisors suggest using the 28/36 rule personally even if you can technically qualify for 43% DTI.
The 28% limit applies to total PITI — principal, interest, taxes, and insurance. This is your total housing payment. A common mistake is applying the 28% limit to just P&I and then being surprised when taxes and insurance push the real payment above budget. Always use PITI in your calculation.
In San Francisco, New York, or Seattle, adhering strictly to the 28/36 rule would prevent most people from buying. In practice, high-income earners in high-cost cities often spend 30–40% of gross income on housing. The key is whether remaining income covers savings goals, retirement contributions, and lifestyle needs — not the percentage itself.
Step 1: Multiply your gross monthly income by 0.28 to find your maximum PITI. Step 2: Subtract estimated taxes and insurance to find maximum P&I. Step 3: Use the payment formula to back-calculate maximum loan amount. Then add your down payment for maximum purchase price. NestCalcs' Income Qualifier section does this automatically.
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