The question with no obvious answer
"How much house can I afford?" feels like it should have a number, but people guess wildly — some overreach, some undershoot. The 28/36 rule turns your income into a realistic budget in two quick steps, and then a calculator does the rest.
Step 1: The two limits
- 28% for housing. Your monthly housing payment should stay under 28% of your gross (pre-tax) monthly income.
- 36% for total debt. All debt payments combined — housing plus car loans, student loans, and minimum credit-card payments — should stay under 36%.
Example. On a $6,000/month gross income:
- Housing limit: 28% × $6,000 = $1,680/month
- Total debt limit: 36% × $6,000 = $2,160/month
If you already pay $500/month on a car loan, your housing room shrinks to $1,660 to stay inside the 36% total.
Step 2: Turn the payment into a loan size
A monthly payment isn't a price — the loan it supports depends heavily on the interest rate. Here's what a $1,680/month payment buys on a 30-year loan:
| Interest rate |
Approx. loan supported |
| 6% |
about $280,000 |
| 7% |
about $252,000 |
Same income, same payment — but a one-point higher rate cuts your borrowing power by nearly $28,000. This is why rate shopping matters as much as price shopping.
The costs the rule hides
The 28% is supposed to cover your entire housing payment, not just principal and interest. That means:
- Property tax and insurance come out of the 28% first, leaving less for the loan itself.
- HOA or condo fees, where they apply, also count.
- Maintenance isn't in the rule at all — budget separately for it.
So if a mortgage calculator shows principal-and-interest only, the house you can truly afford is smaller than it suggests. A good habit: take your 28% number, set aside a chunk for taxes and insurance, and only then see what loan the remainder supports.
How to use it wisely
- Borrow below the max. The limit is a ceiling, not a target. Room under it becomes savings and a buffer for surprises.
- Lock the rate mentally. Run your budget at a rate a bit higher than today's — if rates rise before you buy, you won't be forced to shrink your search overnight.
- Count all your debt. The 36% is where car and student loans quietly shrink your housing budget.
Run your numbers
Start from your income, apply 28% for housing, subtract room for taxes and insurance, then use the loan calculator to see what loan that payment supports at different rates — and the total interest each one costs. To see how the rate reshapes the total over time, the interest calculator helps, and the percentage calculator makes the 28% and 36% math instant.
