How Much House Can I Afford?

By the Duvora Tools team · November 7, 2026 · 6 min read · How we write our guides

A common guideline is that your total monthly housing payment should be no more than 28% of your gross monthly income, and all your debt payments together no more than 36%. On a $100,000 salary with a few small debts, that typically points to a home price of around $300,000 with 10% down at today's rates — though the exact figure depends on your interest rate, down payment, property taxes and other debts.

This guide walks through the calculation step by step, so you can find your own number rather than relying on a rough multiple of your salary.

The 28/36 rule explained

• 28% front-end ratio: your housing payment — principal, interest, property tax, homeowners insurance, PMI and HOA dues — should be at most 28% of your gross (pre-tax) monthly income.
• 36% back-end ratio: housing plus all other monthly debt payments (car loan, student loans, credit card minimums, personal loans) should be at most 36% of gross income.

Your budget is whichever limit is lower. The 28/36 rule is a planning guideline, not a legal limit. Lenders often approve higher ratios: conventional loans commonly allow total debt-to-income (DTI) up to around 45%, sometimes 50% with strong credit and savings, and FHA loans have their own limits. But being approved for a payment is not the same as being comfortable with it.

Step-by-step example

Let's say you earn $96,000 a year ($8,000 a month) and pay $400 a month on a car loan.

1. Front-end limit: 28% × $8,000 = $2,240 a month for housing.
2. Back-end limit: 36% × $8,000 = $2,880, minus the $400 car payment = $2,480 for housing.
3. The lower figure wins: your housing budget is $2,240 a month.
4. Now split that budget between the parts of a mortgage payment. Assuming a 6.5% 30-year mortgage, 10% down, property tax of 1.1% a year, $150 a month insurance and PMI of 0.6% a year, the budget supports a home price of about $296,000:

Notice that taxes, insurance and PMI take over $550 of the budget. That's why a quick "payment for the loan only" calculation overestimates what you can afford. Try your own numbers in the mortgage calculator, which includes all of these costs.

How much house can I afford on my salary?

Using the same assumptions (6.5% for 30 years, 10% down, 1.1% property tax, $150 insurance, PMI, and $400 a month of other debts):

In high-tax areas, or where insurance is expensive, the price you can afford will be lower. Where property taxes are low, it will be higher.

What changes your number most

Interest rate

Rates have a big effect. With the same $2,240 budget from the example, the affordable home price is about $323,000 at 5.5%, $296,000 at 6.5% and $273,000 at 7.5%. A one-point lower rate adds roughly $25,000 of buying power, which is why improving your credit score before applying is worth it.

Down payment

Putting 20% down instead of 10% removes PMI and means you borrow less of the price. In the example, the affordable price rises from about $296,000 to about $350,000 — though you need much more cash up front ($70,000 instead of $29,600).

Other debts

Once the 36% limit is the one that binds, every $100 of monthly debt payments reduces your buying power by roughly $14,000. Paying off a car loan or credit card before you apply can noticeably increase what you can afford. Our credit card payoff calculator shows how fast you can clear card balances.

Don't forget the cash you need up front

• Down payment: 3%–5% for some conventional and FHA loans, 20% to avoid PMI on a conventional loan.
• Closing costs: commonly around 2%–5% of the loan amount.
• Moving and setup costs: furniture, repairs and utilities deposits.
• Emergency fund: keep several months of expenses after closing. Homes come with surprise repairs.

Budget for ownership costs, not just the mortgage

Renters call the landlord when the water heater breaks. Owners pay for it. A common planning rule is to set aside 1%–2% of the home's value each year for maintenance and repairs. On a $296,000 home that's roughly $250–$500 a month — money that isn't part of the 28% housing ratio but very much part of your real budget.

• Utilities are often higher than in an apartment, especially for older or larger homes.
• Property taxes and insurance can rise after you buy, increasing your escrow payment.
• HOA fees can increase, and HOAs can charge special assessments for big repairs.

If the 28% payment plus these costs leaves you stretched, aim for a lower price.

FHA vs conventional loans at a glance

FHA can help buyers with smaller savings or lower credit scores, but mortgage insurance raises the monthly cost. Compare full Loan Estimates for both before deciding.

Five ways to afford more house safely

1. Pay down other debts to free up room under the 36% limit.
2. Raise your credit score for a better rate; even 0.25%–0.5% helps.
3. Save a bigger down payment to reduce or remove PMI.
4. Look at areas with lower property taxes or insurance costs.
5. Check first-time buyer programmes in your state or city, which may offer down payment help.

What lenders actually look at

• Debt-to-income ratio — as above, often allowing more than 36%.
• Credit score — it affects both approval and your rate.
• Stable income — usually two years of history in the same line of work, with extra documentation if you're self-employed.
• Cash reserves — money left after closing.
• The property — appraisal value and condition.

A lender's pre-approval tells you the most you can borrow. Use the 28/36 rule to decide the most you should borrow.

Your income changes the picture: three quick scenarios

• Two incomes: lenders combine both incomes and both sets of debts. That raises buying power, but make sure you could cover the payment if one income stopped for a while.
• Self-employed: lenders usually average your taxable income over two years. Business deductions that lower your tax also lower the income they count, so plan ahead if you expect to buy.
• Bonuses and overtime: these typically count only if you've received them consistently, often for two years. Base your own budget on your guaranteed salary.

Pre-qualification vs pre-approval

Pre-qualification is a quick estimate based on information you provide; it's useful for early planning but carries little weight with sellers. Pre-approval means a lender has checked your credit, income and assets and issued a conditional commitment for a specific amount. In competitive markets, sellers often expect a pre-approval letter with your offer. Get pre-approved once you're ready to shop seriously, ideally from more than one lender so you can compare rates.

Outside the US?

The same thinking works elsewhere, though lenders use different rules. UK lenders typically cap borrowing at around 4–4.5 times household income and run affordability stress tests. Canadian lenders apply a mortgage stress test at a higher qualifying rate, and Australian lenders assess serviceability with a buffer above the actual rate. In every case, decide your comfortable payment first, then check what lenders will offer.

A quick affordability checklist

• Is the full payment (with tax, insurance, PMI and HOA) at or below 28% of gross income?
• Are all debts together at or below 36%?
• Will you still save for retirement and keep an emergency fund?
• Could you cover the payment for a few months if your income dropped?

If the answer to all four is yes, you're in a comfortable range. Deciding between loan terms too? Read 15-year vs 30-year mortgage.

These are estimates for planning. Confirm rates, taxes, insurance and loan rules with lenders and your local tax office for your situation.

Key takeaways

Frequently asked questions