How Much House Can I Afford? The 28/36 Rule in 2026

Multiply your gross monthly income by 0.28. That number is your ceiling for the full housing payment: principal, interest, property tax, homeowners insurance, HOA dues and mortgage insurance combined. At the 6.66% average 30-year fixed rate Freddie Mac reported for Aug. 27, 2026, a household earning $120,000 a year gets a $2,800 monthly cap, which supports roughly $437,000 of house with 20% down, or about $375,000 with 10% down once private mortgage insurance takes its bite. Everything below is how lenders actually check that number, what the online calculator quietly left out, and the cases where you should buy less than the rule allows.

Quick answer

• Front-end cap: 28% of gross monthly income for the entire housing payment. On $75,000 that's $1,750; on $120,000, $2,800; on $200,000, $4,667.
• Back-end cap: 36% of gross income for housing plus car loans, student loans, credit card minimums, child support and alimony.
• Lenders will go higher. The CFPB's original Qualified Mortgage rule drew the line at a 43% back-end ratio, and automated underwriting routinely approves past that. Approval is not affordability.
• The median existing home sold for $434,100 in July 2026, per the National Association of Realtors. At 6.66% with 20% down, that payment needs about $119,000 of income to fit inside 28%.
• Every $100 of monthly consumer debt costs roughly $14,000 of purchase price once the back-end ratio starts binding. Pay off the car before you shop.

Two ratios, and the second one is usually what stops you

The 28/36 rule is two separate tests run on the same income. Front-end DTI compares your proposed housing payment to gross monthly income. Back-end DTI compares every monthly debt obligation, housing included, to that same income. Underwriters care far more about the back end, because that's the one that predicts whether you'll still be current in year three.

What counts as debt is narrower than people expect. Minimum credit card payments, auto loans, student loan payments, personal loans, child support and alimony go in. Groceries, utilities, phone bills, daycare and your 401(k) contribution do not, which is precisely why a lender's "approved" number can be wildly detached from what your bank account can survive.

And the 43% figure floating around every mortgage forum? It comes from the CFPB's ability-to-repay rule, which originally required a back-end ratio at or below 43% for a general Qualified Mortgage. The Bureau replaced that hard cap in its December 2020 final rule with a price-based threshold tied to APR, while still requiring lenders to consider DTI or residual income. So 43% is no longer a legal wall. Fannie Mae's and Freddie Mac's automated systems will approve strong files at 45% and up.

What $75,000, $120,000 and $200,000 buy at 6.66%

The table below runs the 28% cap through a real amortization at Freddie Mac's Aug. 27, 2026 rate. Assumptions, which you should replace with your own county's numbers: property tax at 1.1% of price, insurance at $150 a month, no HOA, and PMI at 0.50% of the loan balance annually on the 10%-down column.

Look at the $75,000 row for a second. A $226,000 to $264,000 budget doesn't buy the national median, and it doesn't come close in Boston, Denver or Seattle. That's the arithmetic behind NAR's July 2026 housing affordability index reading of 103.3, a number that says the median family earns just barely enough to qualify for the median home. It improved from 98.3 a year earlier. Barely qualifying is still barely.

Half a point of rate beats a year of saving

Hold the payment constant and watch the loan size move. A $2,200 monthly principal-and-interest budget on a 30-year fixed supports these balances at rates Freddie Mac actually printed during 2026.

The gap between February's 5.98% and late August's 6.66% is $25,400 of borrowing power on an identical payment. Rates fell below 6% for the first time in three and a half years in late February 2026, then drifted back up through the summer. Nobody, including Freddie Mac's chief economist, knows where they go next.

One caveat that costs people real money: the PMMS average is built from conventional, conforming, fully amortizing purchase loans for borrowers putting 20% down with excellent credit. If you're putting 5% down with a 690 score, your quote will start above the headline. Price your own file, not the survey.

One file, all the arithmetic

Take the $120,000 household. Gross monthly income is $10,000. The 28% cap is $2,800 and the 36% cap is $3,600. They have a $450 car payment and $180 in student loans, so $630 of the back-end budget is already spoken for, leaving $2,970 for housing under the 36% test. The front-end test at $2,800 is tighter, so $2,800 is the working number.

Now build a payment on a $437,000 purchase with 20% down. The loan is $349,600. At 6.66% over 360 months, principal and interest run $2,249. Property tax at 1.1% adds $401. Insurance adds $150. Total: $2,800. It fits exactly, with zero dollars of cushion, which is the honest reading of what the 28% rule delivers.

Drop the down payment to 10% and the math turns fast. On the same $437,000 house the loan becomes $393,300, principal and interest jump to $2,530, PMI at 0.50% adds $164, and the payment lands near $3,245. That's 32.5% of gross. To get back under 28% at 10% down, the purchase price has to fall to roughly $375,000. The down payment didn't just change the cash at closing, it changed the house by $62,000.

Same exercise on the actual median home: $434,100, 20% down, 6.66%, and the payment is about $2,780 with those tax and insurance assumptions. Income required to hold 28%: roughly $119,000. At 10% down, that requirement climbs past $138,000.

Tax, insurance, PMI and HOA: the four line items that break budgets

Principal and interest is the number everyone shops. It's also, in a high-tax county, barely three-quarters of the bill.

Property tax is the biggest variable in the country. The 1.1% used above is a placeholder. Pull the actual line from the county assessor's site for the specific address, and check whether the current owner has an exemption you won't inherit, because a homestead or senior freeze can mask hundreds of dollars a month that reappear the year after you close.

Homeowners insurance has stopped being a rounding error in coastal Florida, Gulf Coast Texas, and wildfire counties in California and Colorado. Get a real quote from a real carrier on the real address before your inspection contingency expires. Not an estimate. A quote.

PMI applies on conventional loans under 20% down and is priced off your credit score, your loan-to-value ratio and the loan term, so your lender can hand you the exact monthly factor in about ten seconds. Under the federal Homeowners Protection Act, you can request cancellation at 80% loan-to-value on the original amortization schedule, and the servicer must terminate it automatically at 78%. FHA loans are different: with the minimum down payment, the annual mortgage insurance premium runs for the life of the loan, and the only exit is a refinance.

HOA dues get skipped by almost every online mortgage affordability calculator, and they count fully against your front-end ratio. A $400 monthly HOA on a condo removes about $66,000 of purchase price from your approval at these rates. Special assessments don't show up in DTI at all, and post-Surfside, condo reserve studies are turning into five-figure surprises.

When 28/36 is the wrong target

The rule is a heuristic from an era of different tax code and different insurance markets, and there are situations where it misfires in both directions.

Buy less than it allows if

Your income is commission, bonus or self-employment based. Lenders average two years of tax returns for a reason, and a 28% cap on a good year is a 40% cap on a bad one. Same logic if you have kids in daycare, a large 401(k) match you refuse to skip, or a job you might leave. Twenty-eight percent of gross on a $200,000 income leaves a different amount of real slack than 28% on $75,000, because the fixed costs of living don't scale with pay.

Stretch past it if

You've got documented income growth, a fully funded six-month emergency reserve that survives closing, and no consumer debt. Some buyers in expensive metros run 33% to 38% of gross on housing for a few years and land fine, mostly because their rent was already 35%. If your current rent plus your monthly savings rate exceeds the proposed payment, you've already stress-tested it. That's evidence, not optimism.

What's not a good reason to stretch? A lender approving you. The approval reflects your file's default probability, not your appetite for a decade of thin months.

Four mistakes that cost buyers the house

Shopping price instead of payment. Two identical $450,000 listings in different school districts can differ by $500 a month in tax, which is roughly $80,000 of borrowing power.

Financing a car during escrow. That $600 payment can push a 43% back-end ratio to 49% and kill the loan three days before closing. Lenders re-pull credit.

Forgetting the conforming loan limit. For 2026, the FHFA set the baseline at $832,750 for one-unit properties in most of the country, up $26,250 from 2025, with a $1,249,125 ceiling in high-cost areas. Cross it and you're in jumbo territory, where reserve requirements and credit standards tighten quickly.

Draining the down payment to the last dollar. Closing costs, the first insurance premium, and the moving truck are all real, and a furnace fails when it fails.

Do this in the next seven days

Pull your credit score and your last two pay stubs. Add up every minimum payment on your credit report, divide by gross monthly income, and you have your current back-end ratio before any mortgage. Subtract that from 36% of your income to see the housing payment you can actually carry. Then look up the property tax bill and get an insurance quote for two specific listings you'd genuinely buy, and build the real payment.

Then get written pre-approvals from three lenders in the same week, including one credit union. Rate quotes on identical files vary by more than most people believe, credit bureaus treat mortgage inquiries inside a short window as a single pull, and the buyer with a real pre-approval letter is the one whose offer gets returned in a market where homes are sitting a median of 29 days.