How Much House Can I Afford? The Real Math Beyond the 28/36 Rule
The pre-approval letter tells you what a lender will *lend*. It does not tell you what you can comfortably *pay*. Those are different numbers, and the gap is where people get hurt.
What Lenders Actually Check: The 28/36 Rule
- Front-end ratio (28%): your housing payment (principal, interest, taxes, insurance) should not exceed 28% of gross monthly income.
- Back-end ratio (36%): housing plus all other debt (cards, auto, student, personal loans) should not exceed 36%.
Many lenders stretch the back-end to 43% — the ceiling for a Qualified Mortgage. Just because you qualify at 43% doesn't mean living there is comfortable.
A Worked Example
Say your gross income is $6,000/month.
- Front-end cap: 28% x $6,000 = $1,680 for housing
- Back-end cap: 36% x $6,000 = $2,160 for housing + all other debt
If your other debts cost $600/month, your housing budget is capped at $1,560 — the back-end rule binds first.
Now subtract what's inside that payment:
| Component | Monthly |
|---|---|
| Principal & interest | ~$1,000 |
| Property taxes | ~$250 |
| Homeowners insurance | ~$125 |
| PMI (if under 20% down) | ~$100 |
| HOA (if applicable) | ~$150 |
| Total | ~$1,625 |
You're already over the $1,560 cap — before a single repair. This is the arithmetic that makes people house-poor.
The Four Costs People Forget
- PMI. Put down less than 20% and you'll pay private mortgage insurance until you reach 20% equity — often $50-$200/month for nothing.
- Property taxes and insurance escrow. These rise. Your payment does not stay flat even with a fixed rate.
- Maintenance. A common guideline is 1% of the home's value per year in upkeep. On a $350,000 house that's ~$290/month you should be setting aside.
- HOA fees. Not optional, and they increase.
The Lever Most Buyers Miss
Your other debts directly shrink your mortgage budget. Paying off a $300/month car loan frees roughly $300/month of back-end capacity — which can be worth tens of thousands in purchasing power, or the difference between qualifying and not.
Run your actual ratios with our Debt-to-Income Ratio Calculator before you talk to a lender. If your back-end is above 36%, the highest-return move usually isn't saving a bigger down payment — it's clearing high-interest balances first. Our Debt Avalanche Calculator will show how fast that happens.
Buy below your approval number. The lender's job is to check whether you can survive the payment; yours is to check whether you can live with it.
*Educational only, not financial advice. Loan programs, PMI rules, and DTI limits vary by lender and loan type.*