The quickest way to estimate how much house you can afford is the 28/36 rule: spend no more than 28% of your gross monthly income on housing costs, and no more than 36% of your gross monthly income on all of your debt payments combined. It’s a fast, lender-friendly sanity check — not a guarantee of approval, and not a personalized budget.
Disclaimer: This article is for educational purposes only and does not constitute personalized financial or mortgage advice. We are not licensed mortgage professionals. Talk to a licensed lender before making borrowing decisions.
What is the 28/36 rule?
The 28/36 rule is a guideline lenders and budgeting experts use to gauge home affordability. It has two parts, both measured against your gross (pre-tax) monthly income:
- The 28% (front-end ratio): Your total housing payment should not exceed 28% of gross monthly income.
- The 36% (back-end ratio): Your housing payment plus all other monthly debt should not exceed 36% of gross monthly income.
According to Bankrate, the 28% covers PITI — principal, interest, taxes, and insurance — and the 36% adds in the rest of your recurring debt. Chase and CNBC Select describe it the same way: a rule of thumb that keeps your housing costs from crowding out everything else.
How much of my income should go to a mortgage?
Under the 28% cap, your full housing payment — not just principal and interest — should stay at or below 28% of gross monthly income. That means PITI, plus any HOA dues and private mortgage insurance (PMI) if you put down less than 20%.
Here’s a worked example. All figures below are hypothetical and for illustration only.
Imagine a household with a gross monthly income of $8,000 (about $96,000/year before taxes):
| 28/36 rule applied to $8,000 gross monthly income | Monthly cap |
|---|---|
| 28% — maximum housing payment (PITI + HOA + PMI) | $2,240 |
| 36% — maximum total debt (housing + all other debt) | $2,880 |
| Implied room for non-housing debt (36% − 28%) | $640 |
So in this hypothetical, the household could target a housing payment up to about $2,240/month, and keep all other monthly debt — car loans, student loans, credit card minimums — under about $640/month to stay inside the 36% back-end cap.
How $8,000 gross monthly income breaks down under both caps
If their existing non-housing debt were higher — say $900/month — the 36% cap would bind first, leaving only about $1,980 for housing ($2,880 − $900) even though the 28% cap technically allowed $2,240.
For more on how lenders size the actual loan amount behind that payment, see our guide on how much money you can borrow for a mortgage.
What counts as PITI in the 28%?
PITI is the four-part housing payment lenders look at:
- Principal — the portion that pays down your loan balance.
- Interest — what the lender charges to borrow.
- Taxes — property taxes, usually collected monthly into escrow.
- Insurance — homeowners insurance, also often escrowed.
Bankrate notes that HOA fees and PMI count toward your housing cost too. PMI typically applies when your down payment is under 20% — you can learn how it works and how to drop it in our explainer on what mortgage insurance is and how to avoid paying for it.
What counts toward the 36%?
The 36% back-end ratio is your debt-to-income ratio (DTI) — total monthly debt divided by gross monthly income. The Consumer Financial Protection Bureau defines DTI as “all your monthly debt payments divided by your gross monthly income,” and gives this example: $2,000 in monthly debts ÷ $6,000 gross income = a 33% DTI.
Debts that typically count toward the 36%:
- Your full housing payment (PITI + HOA + PMI)
- Auto loans and leases
- Student loans
- Minimum credit card payments
- Personal loans
- Court-ordered payments like child support or alimony
Day-to-day expenses that usually don’t count toward DTI: groceries, utilities, gas, phone bills, streaming subscriptions, and other costs that aren’t reported as debt. That’s why passing the 28/36 test doesn’t mean a home is comfortably affordable — your real budget includes plenty the rule ignores.
Can you get approved above 36%?
Yes — often. The 28/36 rule is a guideline, not a legal limit, and most lenders approve loans well above a 36% back-end ratio.
- Conventional loans: Many lenders allow a DTI up to roughly 45%, per Bankrate.
- FHA loans: Standard targets are about 31% front-end / 43% back-end, but with strong “compensating factors” (good credit, cash reserves), back-end DTI can stretch to 50% or higher through automated underwriting, according to lending sources summarizing FHA guidelines.
- The 43% benchmark: The CFPB’s Qualified Mortgage rule originally capped DTI at 43% for many loans. That hard cap was later replaced with price-based thresholds for the General QM category, but 43% remains a widely cited industry reference point, as Bankrate explains.
Getting approved above 36% doesn’t mean you should. A higher DTI leaves less cushion for emergencies, savings, and the surprise costs of homeownership. Before you stretch, it’s worth running through the right questions to ask when buying a house.
Frequently asked questions
Is the 28/36 rule based on gross or net income? Gross income — your earnings before taxes and deductions. The CFPB calculates DTI against gross monthly income, so a 28% or 36% cap will feel tighter once taxes leave your paycheck.
Does the 28% include property taxes and insurance? Yes. The 28% applies to full PITI — principal, interest, taxes, and insurance — plus HOA dues and PMI where they apply, not just principal and interest.
What if my income is variable or I’m self-employed? Lenders typically average your documented income over a period (often two years) rather than using a single strong month. Run the 28/36 math on a conservative average so you don’t overcommit.
Is the 28/36 rule outdated in a high-cost market? It’s a starting point, not a ceiling on what lenders will approve. In expensive markets, many buyers qualify above 36%, but the rule still works as a quick gut-check on whether a payment is reasonable relative to income.
How do I calculate my own numbers? Multiply your gross monthly income by 0.28 for your housing cap and by 0.36 for your total-debt cap. Subtract your existing monthly debt from the 36% figure to see how much room is left for housing.
The bottom line
The 28/36 rule is a fast, sourced way to translate income into a realistic housing budget: 28% of gross income for housing, 36% for all debt combined. Real lender limits — especially on FHA and conventional loans — frequently run higher, but staying near the 28/36 line leaves more margin for the rest of your financial life. Treat it as a floor for caution, not a target to max out.
Sources: Consumer Financial Protection Bureau, Bankrate, Chase, and CNBC Select.