28/36 Rule · DTI · 2026 Rates

How Much House Can I Afford?

Calculate the maximum home price you can afford based on your income, existing debts, and down payment. Uses the standard 28/36 debt-to-income rule used by most mortgage lenders.

Last updated · 2026 mortgage rate, conforming limit and FHA premium checked against Freddie Mac, FHFA and HUD

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The 28/36 Rule Explained

Under the 28/36 rule, your total housing payment should stay at or below 28% of gross monthly income, and all debts at or below 36%. On a $100,000 salary that caps housing at $2,333 a month, which at 6.95% with 20% down buys a home of about $356,000. Enter your income, debts and down payment above to get your own maximum price.

Lenders use the 28/36 rule to assess mortgage eligibility. Your total housing costs (PITI: Principal, Interest, Taxes, Insurance) should not exceed 28% of gross monthly income. All monthly debt payments combined should not exceed 36% of gross income.

These are guidelines, not laws. FHA loans allow up to 31/43. VA and USDA loans can go higher with compensating factors. A higher credit score, larger down payment, or significant cash reserves can help you qualify even if you're above these ratios.

Front-End DTI (28%)

The front-end ratio is your total housing cost divided by gross monthly income. Housing cost = mortgage P&I + property taxes + homeowner's insurance + HOA fees + PMI (if applicable). Most conventional loans want this under 28%. FHA allows up to 31% with good credit.

Back-End DTI (36%)

The back-end ratio is all monthly debt payments divided by gross income. Include: housing cost + car payments + student loans + credit card minimums + personal loans. Conventional loans typically cap this at 36 to 43%. FHA allows 43 to 50%. The lower, the better for approval and rate.

Down Payment Impact

A 20% down payment avoids PMI (Private Mortgage Insurance, typically 0.5 to 1.5% of loan annually), immediately improves your DTI by reducing the loan amount, and often gets you better rates. Less than 20% is fine with an FHA (3.5% min) or conventional loan (3% min), but you'll pay PMI until you reach 20% equity.

How Rates Affect Affordability

A 1% change in mortgage rate affects affordability significantly. At 5%: $400K loan = $2,147/mo P&I. At 7%: $400K loan = $2,661/mo P&I. That $514 monthly difference means you need $22,000 more annual income to qualify for the same loan at 7% vs 5%. This is why affordability dropped sharply as rates rose 2022 to 2023.

How Much House You Can Afford by Income

30-year fixed at 6.95%, 20% down, $450 a month for property tax and homeowners insurance, no HOA. The second pair of columns assumes $500 a month of other debt payments, such as a car loan.

Gross incomeMax housing payment (28%)Max loan, no other debtHome price, no other debtHome price, $500 debt
$50,000$1,167$108,266$135,333$103,860
$60,000$1,400$143,516$179,395$160,511
$75,000$1,750$196,390$245,488$245,488
$100,000$2,333$284,514$355,642$355,642
$125,000$2,917$372,638$465,797$465,797
$150,000$3,500$460,761$575,952$575,952
$200,000$4,667$637,009$796,261$796,261

Below about $75,000 of income, $500 of other debt pushes you past the 36% back-end limit before you reach the 28% housing limit, so the debt directly cuts the price you can buy. Above that, the 28% rule is the tighter of the two and the same debt changes nothing on paper.

Income Needed for a Given Home Price

Same assumptions: 20% down, 6.95% for 30 years, $450 a month for tax and insurance, housing kept at 28% of gross income.

Home priceLoan (80%)Monthly P&IPayment with tax and insuranceIncome needed
$250,000$200,000$1,324$1,774$76,024
$300,000$240,000$1,589$2,039$87,372
$400,000$320,000$2,118$2,568$110,067
$500,000$400,000$2,648$3,098$132,762
$750,000$600,000$3,972$4,422$189,501

With less than 20% down you also pay PMI, and the lender counts it in the 28%. This calculator does not add PMI for you, so if the result shows "PMI Required", put an estimate in the HOA field to see the effect.

How the Rate and Your Debts Change the Answer

Mortgage rate

$100,000 income, no other debt, $1,883 a month left for principal and interest after $450 of tax and insurance.

RateMax loanHome price with 20% down
6.0%$314,124$392,655
6.5%$297,964$372,455
6.95%$284,514$355,642
7.5%$269,350$336,687

Going from 6% to 7.5% cuts the price you qualify for by about $56,000 at this income, with the same monthly payment.

Monthly debt payments

On an $85,000 income ($7,083 a month) with $350 of tax and insurance at 6.95%, the maximum loan is $246,747 with $0 or $400 of other debt, because the 28% rule binds first. At $800 of debt the 36% rule takes over and the loan falls to $211,497. At $1,200 it falls to $151,069. Clearing that $800 payment before you apply raises the loan limit by $35,250, far more than another $10,000 of savings adds to the price.

2026 Limits Lenders Work With

  • Rates: the 30-year fixed averaged 6.95% on 17 September 2026 in Freddie Mac's weekly survey, up from 6.26% a year earlier.
  • Conforming loan limit: $832,750 for a one-unit home in most counties in 2026. A larger loan is a jumbo loan with stricter down payment and credit rules.
  • PMI: on a conventional loan you can ask to cancel it when the balance reaches 80% of the original home value, and it ends automatically at 78%.
  • FHA: 3.5% minimum down with a 580 score, a 1.75% upfront premium and an annual premium of 0.55% for most borrowers.

Mistakes that inflate the number

Leaving out property tax or using last year's figure (a purchase usually triggers a reassessment), forgetting HOA dues, and counting a bonus or overtime that the lender will not accept without a two-year history. The calculator's maximum is what a lender may approve, not what fits your budget once you add maintenance, commuting and saving for retirement.

Method and sources. Maximum loan = (housing budget minus tax, insurance and HOA) × ((1+r)n − 1) ÷ (r(1+r)n), where the housing budget is the lower of 28% of gross monthly income and 36% of gross monthly income minus other debt payments. Every figure in the tables above was computed with that formula. Rates: Freddie Mac Primary Mortgage Market Survey. Loan limit: FHFA 2026 conforming loan limit announcement. PMI: Homeowners Protection Act and CFPB guidance. FHA premiums: HUD Mortgagee Letter 2023-05. Estimates only, not a loan approval.
Results are estimates based on the 28/36 guideline. Actual loan qualification depends on credit score, employment history, asset verification, and lender-specific criteria. Consult a licensed mortgage professional.

Frequently Asked Questions

On an $80,000 salary using the 28% front-end rule: $80,000/12 = $6,667 monthly income × 0.28 = $1,867 max PITI. Subtract estimated taxes ($300), insurance ($100), and HOA ($0) = $1,467 for P&I. At 6.75% for 30 years, $1,467/month supports a ~$226,000 loan. With a $20,000 down payment, you could afford roughly $246,000. Exact numbers depend on your existing debts and the back-end (36%) constraint.

DTI (Debt-to-Income Ratio) is total monthly debt payments divided by gross monthly income. Two types: Front-end DTI = housing costs / income (max 28% conventional, 31% FHA). Back-end DTI = all debts including housing / income (max 36 to 43% conventional, 43 to 50% FHA). Lenders check both. Your loan is limited by whichever constraint is more restrictive. Strong credit, large down payment, and cash reserves can allow higher DTIs.

Rough calculation: $300,000 house with 10% down = $270,000 loan. At 6.75% / 30 years: $1,751/month P&I. Add taxes ($300) + insurance ($120) = $2,171 PITI. At 28% DTI: $2,171 / 0.28 = $7,754/month minimum gross income = $93,050/year. Back-end DTI of 36%: if you have $400/month in other debts, max total = $7,754 × 0.36 = $2,791, minus $400 = $2,391 for housing, this supports a slightly larger loan, so front-end is the binding constraint here.

PMI (Private Mortgage Insurance) is required when your down payment is less than 20% on a conventional loan. It protects the lender if you default. Cost: typically 0.5 to 1.5% of the loan amount annually, divided into monthly payments. On a $270,000 loan at 1%: $225/month. You can ask in writing to cancel PMI once the balance reaches 80% of the home's original value, and it ends automatically at 78%. Removing it earlier based on a higher appraisal is up to the lender. FHA MIP works differently and may be permanent.

Most financial advisors say no: buy below your maximum. Reasons: Job loss, medical emergency, or income reduction is easier to handle with lower payments. Maintenance costs (1 to 2% of home value/year) need to be in your budget. You need money for furnishings, repairs, and improvements. The emotional stress of being 'house poor' (all income going to housing) is real. A common guideline: target a home at 2 to 3× your annual income, leaving room for other financial goals like retirement savings and an emergency fund.

The Canadian mortgage stress test requires qualifying at the higher of: the contract rate + 2%, OR 5.25% (the floor rate). So if your mortgage rate is 5.5%, you must qualify at 7.5%. This means your maximum home price in Canada is lower than in the US for the same income. The stress test was introduced in 2017 to ensure borrowers can handle rate increases. It applies to all insured mortgages and to uninsured mortgages at federally regulated lenders.

Minimum credit scores: FHA loan with 3.5% down: 580+. FHA with 10% down: 500 to 579. Conventional loan: typically 620+ minimum, but 740+ gets the best rates. VA loan: no official minimum, but lenders typically require 620+. USDA loan: 640+. For conventional loans, every 20 points of credit score can affect your rate by 0.125 to 0.25%, which translates to thousands of dollars over the loan term. A 760+ score gets the best conventional rates.

Closing costs typically run 2 to 5% of the loan amount. On a $270,000 loan: expect $5,400 to $13,500. Major components: Lender fees (origination, points, underwriting), Title insurance (owner's + lender's policy), Escrow and settlement fees, Pre-paid items (first-year insurance, property tax escrow, prepaid interest), Government recording fees. You can sometimes negotiate seller concessions to cover closing costs, or roll them into the loan with some programs (VA allows financing of the funding fee). Shop multiple lenders: fees vary significantly.

Beyond the down payment, budget for: Closing costs (2 to 5% of loan), Emergency fund (3 to 6 months of housing expenses), Moving costs ($1,000 to $5,000+), Initial repairs and improvements, New appliances and furniture. A useful target: have your down payment + 5% of home price in savings at closing. For a $300,000 home with 10% down: $30,000 down + $15,000 buffer = $45,000 saved before closing. Don't drain your emergency fund for the down payment.

FHA loans are government-insured mortgages backed by the Federal Housing Administration. Key features: 3.5% minimum down payment (with 580+ credit score), 10% down accepted with 500 to 579 credit score, Less strict DTI requirements (up to 43 to 50%), Lower credit score minimums than conventional loans. Trade-offs: Mortgage Insurance Premium (MIP) required regardless of down payment, 1.75% upfront plus an annual premium of 0.55% for most borrowers. If down payment < 10%, MIP is permanent. For borrowers with good credit and 20% down, conventional is usually cheaper. FHA is best for first-time buyers with limited savings or lower credit.

About $356,000 with 20% down, if you have no other debts. The 28% rule allows $2,333 a month for housing. After $450 for property tax and insurance, $1,883 is left for principal and interest, which supports a $284,514 loan at 6.95% for 30 years. With $800 a month of other debt the 36% rule takes over and the loan drops to about $264,000.

Roughly $135,000 with 20% down and no other debt. 28% of $4,167 a month is $1,167 for housing. After $450 of tax and insurance, $717 covers a $108,266 loan at 6.95%. A $500 car payment brings that down to about $104,000, because the 36% limit then binds. In lower-tax areas, or with an FHA loan, the number can be higher.
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