Short answer: the 28/36 rule says your housing payment should stay at or below 28% of your gross monthly income, and all your debts combined at or below 36%. On a $100,000 salary that means a housing payment of $2,333 a month. At the current 30-year fixed rate of 7.24% (Freddie Mac, week of October 29, 2026), after $450 a month for property taxes and insurance, that supports a loan of about $276,000 and a home price of about $345,000 with 20% down. The median existing home costs $417,500 (NAR, September 2026) and needs roughly $117,000 a year of income.
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The 28/36 Rule in Plain English
The rule has two parts, both measured against your gross monthly income — before tax, not take-home pay. The 28% is the front-end ratio: your total monthly housing payment should not exceed 28% of gross monthly income. The 36% is the back-end ratio: your housing payment plus every other monthly debt — car, student, card and personal loans — should not exceed 36%.
It is a guideline, not a law. The Consumer Financial Protection Bureau (CFPB) defines the debt-to-income ratio as your monthly debt payments divided by your gross monthly income. But lenders regularly approve loans above 36% back-end — conventional automated underwriting can stretch to 50% with strong credit or cash reserves. The rule is still the right personal check, because buyers who stretch past it often feel house-poor even when a lender says yes.
What Counts in the Monthly Housing Payment
The 28% covers the full housing payment, not just principal and interest. Lenders count PITI — principal, interest, property taxes and homeowners insurance — plus homeowners association (HOA) dues, and private mortgage insurance (PMI) if your down payment is under 20%. Every dollar of tax, insurance, HOA or PMI comes straight out of the loan you can carry.
The examples below subtract $450 a month for taxes and insurance — an assumption, not a quote; the figure can easily run $600 or more in a high-tax state.
The 28/36 Rule by Income — at 7.24% Over 30 Years
The table applies the rule at the verified rate of 7.24% for a 30-year fixed loan, where each $1,000 borrowed costs $6.82 a month in principal and interest. Taxes and insurance are assumed at $450 a month.
| Gross income | Monthly income | 28% housing payment | 36% total debt cap | Left for principal & interest | Maximum loan | Maximum home price (20% down) |
|---|---|---|---|---|---|---|
| $75,000 | $6,250.00 | $1,750.00 | $2,250.00 | $1,300.00 | $190,756 | $238,445 |
| $100,000 | $8,333.33 | $2,333.33 | $3,000.00 | $1,883.33 | $276,352 | $345,440 |
| $150,000 | $12,500.00 | $3,500.00 | $4,500.00 | $3,050.00 | $447,543 | $559,429 |
Worked Example 1: $100,000 Income, Step by Step
Take a buyer earning $100,000 a year, with no other debts, buying with 20% down at 7.24% fixed over 30 years. Monthly gross income is $100,000 ÷ 12 = $8,333.33; the maximum housing payment at 28% is $2,333.33. Less $450 for tax and insurance, $1,883.33 is left for principal and interest. At $6.815 a month per $1,000 borrowed (7.24%, 30 years), the maximum loan is $1,883.33 ÷ $6.815 × $1,000 = $276,352, and the maximum home price at 20% down is $276,352 ÷ 0.80 = $345,440, with a $69,088 down payment.
Worked Example 2: $75,000 and $150,000 — and the Median Home
On $75,000 a year, the 28% housing payment is $1,750 a month; after $450 for tax and insurance, $1,300 is left for principal and interest, supporting a loan of $190,756 and a home price of $238,445 with 20% down. On $150,000 a year, the housing payment is $3,500, the loan is $447,543 and the home price is $559,429 with 20% down.
Now set those figures against the market. The median existing-home price was $417,500 in September 2026 (NAR), up 1.3% from $412,300 a year earlier. With 20% down, the loan is $334,000, and principal and interest at 7.24% is $2,276.20 a month. Add $450 for tax and insurance and the housing payment is $2,726.20 — which, at 28%, needs gross income of $116,837 a year. A $100,000 earner is $72,000 short of the median home on price. The rate matters as much as the price: on a $300,000 loan, principal and interest is $1,845.20 at 6.24%, $2,044.49 at 7.24% and $2,251.69 at 8.24%.
Maximum home price at 20% down, by gross income — 7.24% fixed, 30 years, $450 a month for tax and insurance.
How the Down Payment Changes the Answer
A bigger down payment shrinks the loan, and at 20% it removes PMI entirely. The table holds the home price at $300,000 and the rate at 7.24%:
| Down payment | Cash down | Loan amount | Principal & interest | PMI |
|---|---|---|---|---|
| 20% | $60,000 | $240,000 | $1,635.59 | None |
| 10% | $30,000 | $270,000 | $1,840.04 | Yes — roughly $112.50 to $225.00 a month |
| 5% | $15,000 | $285,000 | $1,942.27 | Yes — roughly $118.75 to $237.50 a month |
PMI typically costs about 0.5% to 1% of the loan amount per year, on the CFPB's range for mortgage insurance. Going from 20% down to 10% down on the same $300,000 home costs about $204.45 a month more in principal and interest, plus PMI — roughly $317 to $429 a month in total. The $100,000 earner above can afford $345,440 with 20% down but only about $307,058 with 10% down before PMI, which then pushes the true maximum lower still.
When the Back-End Ratio Binds Instead
So far the 28% front-end limit has done all the work, because the examples assumed no other debts. Add debts and the 36% back-end limit can take over. Take the same $100,000 earner: the 36% cap is $3,000 a month of total debt. With $600 a month of other debts, the housing payment can be at most $2,400 — still above the $2,333.33 front-end limit. But with $1,200 a month of other debts, the housing payment is capped at $3,000 − $1,200 = $1,800: after $450 for tax and insurance, only $1,350 is left for principal and interest, supporting a loan of $198,093 and a home price of $247,616 with 20% down — nearly $98,000 less than the same earner with no debts.
Five Mistakes That Break the Rule
1. Using take-home pay. The rule is measured on gross income, before tax. 2. Forgetting tax, insurance, HOA and PMI. Principal and interest is only part of the payment. 3. Counting income the lender will not count. Overtime, bonuses and side income usually need a two-year history. 4. Ignoring the back-end. A buyer who passes the 28% test can still fail the 36% test once other debts are added. 5. Buying at the maximum. The rule gives a ceiling, not a recommendation.
When the Rule Bends
The 28/36 rule is a budgeting guide, not the lender's cutoff. Conventional loans commonly allow back-end ratios up to 45%, and automated underwriting can approve up to 50% with compensating factors — a high credit score or large cash reserves. FHA loans use roughly 31% front-end and 43% back-end as standard targets but can stretch higher, and VA loans lean on residual income rather than a hard ratio. The old 43% Qualified Mortgage cap no longer applies as a fixed legal limit: the CFPB replaced it with a price-based standard in 2021. A lender approving 50% back-end is saying the loan is repayable, not that it is comfortable — use the 28/36 rule as your own ceiling.
Frequently Asked Questions
How much house can I afford on $100,000 a year?
About $345,440 with 20% down: the 28% rule allows a $2,333.33 monthly housing payment, and at 7.24% over 30 years, after about $450 for taxes and insurance, that supports a loan of about $276,352.
What is the 28/36 rule?
A mortgage affordability guideline with two limits, both measured against gross monthly income: housing costs at or below 28%, and housing costs plus all other monthly debts at or below 36%. It is a budgeting guide, not a legal cap.
Does the 28% include property taxes and insurance?
Yes — the 28% covers the full housing payment: principal, interest, taxes and insurance, plus HOA dues and PMI where they apply. On the $417,500 median home, tax and insurance add about $450 a month to the $2,276.20 of principal and interest at 7.24%.
How much house can I afford with 10% down?
Less than with 20% down: the loan is bigger relative to the price, and PMI adds a monthly cost inside the 28% allowance. On a $100,000 salary at 7.24%, the maximum is about $345,440 with 20% down but about $307,058 with 10% down before PMI, which then pushes it lower still.
What income do I need to afford the median home?
About $116,837 a year. The median home cost $417,500 in September 2026 (NAR); with 20% down, the $334,000 loan costs $2,276.20 a month in principal and interest at 7.24%, plus $450 for tax and insurance — a $2,726.20 housing payment.
Can I afford a house if my debt-to-income ratio is over 36%?
Possibly — 36% is a guideline, not the lender's cutoff. Conventional loans commonly allow back-end ratios up to 45%, and automated underwriting can reach 50% with strong credit or cash reserves. But a higher ratio leaves less room for repairs or income drops, so treat 28/36 as your own ceiling.
Sources: Freddie Mac Primary Mortgage Market Survey, 30-year fixed average 7.24% for the week of October 29, 2026 (6.17% a year earlier); National Association of REALTORS Existing-Home Sales report, September 2026 (median existing-home price $417,500, up 1.3% year over year); Consumer Financial Protection Bureau — debt-to-income ratio definition and mortgage insurance costs; Fannie Mae Selling Guide B3-6-02. All figures were verified by independent calculation at 7.24% over 30 years; tax and insurance are assumed at $450 a month and vary by location. This article explains the maths and is not financial advice — confirm your rate with a licensed lender before you buy.
Related reading: Should You Rent or Buy a House? The 5% Rule Breaks at 7.24% — the Full Maths · Are Mortgage Points Worth It? The Break-Even Test on a $400,000 Loan · What Is a Good Debt-to-Income Ratio?
Planning a home purchase? If you are working out what you can afford or weighing a mortgage, book a free consultation with Asad Webs — we will help you work out the numbers before you apply.
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