What the 28/36 rule says
It’s two limits, both worked out on your gross income, before tax:
- 28% for housing. Your mortgage payment and the other costs of the home. Lenders call this the front-end ratio.
- 36% for all your debts. Housing plus car loans, student loans, credit cards and so on. This is the back-end ratio.
| Part | Amount |
|---|---|
| Housing, up to 28% | $1,866.67 |
| Other debts, so all debts stay under 36% | $533.33 |
| Everything else | $4,266.67 |
| Monthly pay before tax | $6,666.67 |
Everything else covers taxes, savings and day-to-day spending.
Freddie Mac uses 28% and 36% as guidelines when a lender checks a loan by hand, and the Consumer Financial Protection Bureau (CFPB) calls 28% “a mortgage lending rule of thumb”.
What counts as housing costs?
Everything you pay each month for the home:
- the mortgage principal and interest
- property tax
- homeowners insurance (and flood insurance if you need it)
- mortgage insurance (PMI), if your down payment is under 20%
- HOA fees, if there are any
What counts as debt?
Included: car loans, student loans, minimum credit card payments, personal loans, leases, and child support or alimony you pay. A loan with 10 or fewer payments left can sometimes be left out.
Not included: utilities, groceries, childcare, commuting and insurance other than on the home. They still come out of your budget, though.
How much house can I afford?
Here’s what the 28/36 rule allows at different incomes, with no other debts and a 20% down payment:
| Income a year | Housing budget a month | Home price | Down payment |
|---|---|---|---|
| $50,000 | $1,167 | $159,636 | $31,928 |
| $60,000 | $1,400 | $196,274 | $39,255 |
| $75,000 | $1,750 | $251,230 | $50,246 |
| $100,000 | $2,333 | $342,825 | $68,565 |
| $150,000 | $3,500 | $526,014 | $105,203 |
These assume a 30-year fixed rate of 7.24%, property tax of 1.1% of the price a year and home insurance of $1,800 a year. Freddie Mac’s average 30-year fixed rate was 7.24% on 29 October 2026. Property tax varies a lot from state to state, so your figure could be quite different.
With a smaller down payment, you can afford less. The same monthly budget has to cover a bigger loan plus PMI. On $80,000, a 20% down payment gets you up to $269,549, but 5% down gets you up to $220,460.
How other debts lower your budget
The 36% limit only bites when your other debts are big enough. On $80,000 a year, all your debts can come to $2,400 a month. Housing takes up to $1,867 of that, which leaves $533 for other debts:
| Other debts a month | Housing budget | Home price (20% down) |
|---|---|---|
| $0 | $1,867 | $269,549 |
| $300 | $1,867 | $269,549 |
| $600 | $1,800 | $259,082 |
| $900 | $1,500 | $211,975 |
Above $533 a month, every extra dollar of debt payments takes a dollar off your housing budget. Paying off a car loan before you buy can make a real difference.
Do lenders stick to 28/36?
Not always. It’s a guideline, and the limits lenders actually use depend on the loan:
| Loan | Usual limits |
|---|---|
| Conventional (Fannie Mae) | 36% for all debts on loans checked by hand, up to 45% with a good credit score and savings, and up to 50% through Fannie Mae’s automated system |
| Conventional (Freddie Mac) | 28% and 36% as guidelines on loans checked by hand, which can’t go above 45% |
| FHA | 31% for housing and 43% for all debts on loans checked by hand, up to 40% and 50% with strengths such as savings |
| VA | 41% for all debts, plus a check that you have enough left over each month |
| USDA | 29% for housing and 41% for all debts, with exceptions |
There’s no legal maximum. Lenders must check that you can repay, but federal rules don’t set a number.
Why stick to it if you can borrow more?
Being approved for a loan doesn’t mean the payment will be comfortable. The CFPB suggests looking at what’s left after housing and debts, because that money has to cover utilities, groceries, childcare, health insurance, repairs and everything else.
Staying near 28/36 leaves room for those costs, for saving, and for surprises like a new roof.
Don’t forget the up-front costs
- Down payment: as little as 3% on a conventional loan for first-time buyers, 3.5% on an FHA loan with a credit score of 580 or more, and nothing on VA and USDA loans if you qualify.
- PMI: with less than 20% down on a conventional loan, you usually pay mortgage insurance. Freddie Mac says to expect about $30 to $70 a month for every $100,000 you borrow. You can ask to cancel it once you owe 80% of the home’s original value, and it ends automatically at 78%.
- Closing costs: usually 2% to 5% of the purchase price, on top of your down payment.
Work it out for your income
Our how much house can I afford calculator uses the 28/36 rule with your income, debts, down payment and local property tax. Then see the full monthly payment on any price with our mortgage calculator.