How much house can you actually afford?
The number a lender will approve you for and the number you can comfortably live with are rarely the same. Here's how lenders decide — and how to find a budget that won't stretch you thin.
Reviewed by Robert · Updated June 2026
The 28/36 rule
Most lenders evaluate affordability using two debt-to-income (DTI) ratios:
- The 28% front-end ratio — your total monthly housing payment (principal, interest, taxes, insurance) should stay at or below 28% of your gross monthly income.
- The 36% back-end ratio — your housing payment plus all other monthly debt (car loans, student loans, credit cards) should stay at or below 36% of gross monthly income.
The lower of the two is your realistic ceiling. Some loan programs allow higher ratios, but 28/36 is the long-standing benchmark for a comfortable budget.
What actually drives the number
- Income — your gross (pre-tax) annual income.
- Existing debts — the more you already owe monthly, the less room for a mortgage.
- Down payment — a larger one lowers the loan and can remove PMI.
- Interest rate & term — both shift how much house a given payment buys.
- Taxes & insurance — these vary widely by location and add to your monthly total.
"Approved" isn't the same as "comfortable"
Lenders qualify you on gross income — before taxes, retirement contributions, insurance, childcare, groceries, and everything else real life costs. It's common to be approved for more than you'd actually want to spend. A good rule of thumb: aim below your maximum so you keep breathing room for savings, emergencies, and the occasional splurge.
Ways to afford more — responsibly
- Pay down existing debt to free up your back-end ratio.
- Save a larger down payment to shrink the loan and skip PMI.
- Improve your credit to qualify for a better rate.
CapitalCalcs provides educational estimates, not financial advice. See how we calculate for the formulas and assumptions behind these tools.