"How much house can I afford?" has two answers: the one a lender will approve you for, and the one you can comfortably live with. They're rarely the same number. This guide explains the rule of thumb lenders actually use, how to work backward from your salary to a home price, and the real-world costs that shrink that number.

The 28/36 rule

The most widely used affordability guideline is the 28/36 rule, and it has two halves:

  • The 28% front-end ratio: your total monthly housing payment (principal, interest, taxes, and insurance) should be at or under 28% of your gross monthly income.
  • The 36% back-end ratio: all your monthly debt — housing plus car loans, student loans, credit-card minimums — should stay under 36% of gross monthly income.

"Gross" means before tax. Lenders use pre-tax income because that's the number on your pay stubs and tax returns, and it standardizes comparisons. Your take-home pay is lower, which is exactly why a payment that "qualifies" can still feel tight.

Turning salary into a home price

Start with the 28% ceiling. If you earn $100,000 a year, your gross monthly income is about $8,333, and 28% of that is roughly $2,333 — your maximum comfortable housing payment. Now work backward: that $2,333 has to cover principal, interest, and property tax and insurance, not just the loan.

At a 6.5% rate on a 30-year loan with 20% down, and after leaving room for property tax and insurance, that $2,333 ceiling supports a home price somewhere in the mid-$300,000s in a typical-tax state — and noticeably less in a high-property-tax state, because more of your monthly ceiling gets eaten by tax. This is why two people with identical salaries can afford very different homes depending on where they buy.

The back-end ratio is the silent dealbreaker

Plenty of buyers pass the 28% housing test but fail the 36% total-debt test. A $500 car payment and $400 in student loans is $900 a month of non-housing debt. On a $100,000 salary, that alone is nearly 11% of your gross income, leaving just 25% for housing instead of 28% — which can knock tens of thousands off your affordable price. Paying down or eliminating other debt before buying often does more for your budget than a slightly bigger down payment.

Costs that lower what you can truly afford

  • PMI. Under 20% down adds private mortgage insurance to your monthly cost, tightening the 28% ceiling.
  • Property tax. Rates vary by state and county; a high-tax area meaningfully reduces the price you can support.
  • Home insurance. Premiums differ by region and risk, and some areas have become significantly more expensive to insure.
  • Maintenance. A common planning figure is roughly 1% of the home's value per year for upkeep — not part of the mortgage, but very real.
  • HOA dues. If the property has them, they count toward your housing ratio and can be substantial.

Comfortable vs. maximum

The 28/36 rule tells you the ceiling. Many financially comfortable buyers deliberately stay well under it — targeting 20–25% of gross income for housing — so they keep room for retirement saving, emergencies, and life. There's nothing wrong with buying less house than you qualify for; it's often the smarter play.

The bottom line

Affordability starts with 28% of your gross monthly income for housing and 36% for all debt, then gets adjusted down by property tax, insurance, PMI, and your existing obligations. Enter your income and target location into an affordability calculator to see your own number — and consider aiming a little below the maximum for breathing room.