Most US lenders use the 28/36 rule: spend no more than 28% of gross income on housing, and no more than 36% on all debts combined.
Example: $120,000 income, $500/mo debts, 6.5% rate
- 28% cap: $120,000 × 28% ÷ 12 = $2,800/mo for housing
- 36% cap: $120,000 × 36% ÷ 12 − $500 = $3,100/mo total
- The lower one wins: $2,800/mo → roughly a $440,000 home with 20% down
Don't forget
The rule covers principal & interest. Budget extra for property tax, insurance, HOA and maintenance (~1% of home value/year).
Get your number in seconds with our House Affordability Calculator, then sanity-check the payment with the Mortgage Calculator.