The 28/36 Rule: How Much Mortgage Can You Actually Afford by Income?

What is the 28/36 Rule?

When applying for a conventional home loan in the United States, lenders evaluate your creditworthiness using two Debt-to-Income (DTI) metrics: your front-end ratio and your back-end ratio.

The 28/36 rule is the classic underwriting benchmark used by mortgage lenders to determine how much home you can safely afford without financial distress.

1. The 28% Front-End Ratio (Housing Costs)

Your total monthly housing expense—including Principal, Interest, Property Taxes, Homeowners Insurance, and HOA fees (PITI)—should not exceed 28% of your gross pre-tax monthly income.

For example, a household earning $100,000 per year ($8,333/month) has a maximum front-end housing allowance of $2,333 per month.

2. The 36% Back-End Ratio (Total Debt Obligations)

Your total recurring monthly debt payments—including your new housing payment plus auto loans, student loans, minimum credit card payments, and personal loans—should not exceed 36% of your gross monthly income.

Using the same $100,000 household ($8,333/month), total debt payments cannot exceed $3,000 per month. If this borrower already pays $500/mo for a car loan and $300/mo in student loans ($800 total non-housing debt), their remaining housing limit is capped at $2,200/mo ($3,000 - $800), even though the 28% rule allowed $2,333.

How to Use the Rule Before House Hunting

Calculating your 28/36 ratios before talking to real estate agents prevents you from falling in love with houses outside your comfortable budget. Even if a lender pre-approves you for a higher DTI (some FHA loans permit up to 43% to 50%), sticking to 28/36 ensures you maintain room for retirement savings, home maintenance, and emergency reserves.