How Much House Can I Afford? DTI, the 28/36 Rule, and a Budget That Fits

By Ahmad Dogar
FitCreeper Finance · Published October 2026 · Educational only — not personalized financial, legal, or tax advice

How this article was made: Drafted with AI assistance, then checked line by line against the primary sources listed at the end of this page (the CFPB's Ask CFPB answers on home affordability, debt-to-income ratios, Qualified Mortgages, down payments, and escrow; Fannie Mae's Selling Guide on debt-to-income ratios; FHFA's 2026 conforming loan limits; and Freddie Mac's Primary Mortgage Market Survey), fetched on October 12, 2026. Worked examples use simple illustrative numbers, not real accounts. Rules and company policies change, so re-check the linked sources before you act.

"How much house can I afford?" sounds like a question with one answer. In practice there are two: how much a lender is willing to lend you, and how much you can repay without squeezing everything else in your life. The Consumer Financial Protection Bureau (CFPB) puts it bluntly: focus on a mortgage that's affordable given your other priorities, not how much you qualify for.

This guide explains how lenders size you up with the debt-to-income ratio (DTI), what the popular 28/36 rule of thumb does and doesn't tell you, how interest rates change the math, and a four-step way to set a budget of your own. The worked example uses illustrative numbers; plug in your own before you shop.

Qualifying vs affording

Comparison of how much you qualify for versus how much you can afford, based on the CFPB: lenders look at income, debts, assets, and credit using standard ratios, while affordability also depends on your family's expenses, savings goals, and future costs that lenders do not consider

The CFPB explains that lenders will often tell you how much you're qualified to borrow, meaning how much they're willing to lend, and that online calculators produce similar answers using standard ratios. But how much you could borrow is very different from how much you can repay without stretching your budget too thin. Lenders don't take into account all of your family and financial circumstances.

The CFPB's Buying a House guide makes the same point about preapproval: lenders look at your income, assets, debts, and credit record, but your financial life is more complicated than that, and only you can decide how much you're comfortable paying up front and each month.

That doesn't make the lender's number useless. It's a ceiling. Your job is to find the comfortable number underneath it.

How lenders measure affordability: DTI

Key affordability ratios: debt-to-income is monthly debt payments divided by gross monthly income; the 28/36 rule of thumb caps housing at 28 percent and all debt at 36 percent; Fannie Mae's manual underwriting maximum is 36 percent, up to 45 percent with extra credit and reserve requirements, and 50 percent through its automated system

The CFPB defines your debt-to-income ratio as all your monthly debt payments divided by your gross monthly income, meaning income before taxes and other deductions. Its example: a $1,500 mortgage payment, a $100 auto loan, and $400 of other debts add up to $2,000 a month. With $6,000 of gross monthly income, the DTI is about 33%.

Different loan products and lenders set different DTI limits, the CFPB says. One widely used benchmark comes from Fannie Mae, whose Selling Guide sets the rules for conventional loans it buys from lenders. It states:

For manually underwritten loans, the maximum total DTI is 36% of stable monthly income, and it can go up to 45% if the borrower meets credit score and reserve requirements in Fannie Mae's Eligibility Matrix.
For loans underwritten through its automated system, Desktop Underwriter (DU), the maximum allowable DTI is 50%.

Federal rules also matter. The CFPB explains that a lender must make a good-faith effort to determine that you can repay a mortgage before giving it to you (the "ability-to-repay" rule). For a loan to be a Qualified Mortgage, the lender must verify your income or assets and your debts, and consider either your DTI or your residual income, meaning what's left after paying monthly debts.

For a deeper walkthrough of DTI, including what counts as debt, see our debt-to-income ratio guide.

The 28/36 rule of thumb

$Illustrative bar chart applying the 28/36 rule to 8,000 dollars of gross monthly income with 500 dollars of other debt payments: 28 percent allows 2,240 dollars for housing, 36 percent allows 2,880 dollars for all debts, which leaves 2,380 dollars for housing after other debts, so the lower 2,240 dollar figure applies$

You'll see the 28/36 rule quoted everywhere. It says to keep your housing payment at or below 28% of gross monthly income and all debt payments, housing included, at or below 36%. It's a rule of thumb, not a law or a federal standard: none of the official sources we reviewed sets a 28% housing limit, and as shown above, Fannie Mae's own limits can go well past 36% under certain conditions.

Still, it's a reasonable starting point because it's conservative. Here's how it works in an illustrative example:

Gross income: $96,000 a year, or $8,000 a month.
Other debts: a car payment and student loan totaling $500 a month.
28% of $8,000 = $2,240 for housing.
36% of $8,000 = $2,880 for all debts. Subtract the $500 of other debts and you have $2,380 for housing.
Use the lower of the two: $2,240 a month for total housing costs.

At that payment, total DTI would be ($2,240 + $500) ÷ $8,000, or about 34%. That's under Fannie Mae's 36% manual-underwriting maximum. A lender might approve more, but the rule of thumb is already telling this buyer where a cautious budget sits.

What your housing payment has to cover

Illustrative bar chart splitting a 2,240 dollar monthly housing budget into 1,690 dollars of principal and interest and an assumed 550 dollars for property taxes, homeowners insurance, and mortgage insurance

The $2,240 isn't all available for the loan. The CFPB reminds buyers that homeowners insurance, property taxes, and possibly private mortgage insurance or homeowners association fees are typically added to the monthly payment, and should be counted when figuring what you can afford.

Many lenders collect taxes and insurance through an escrow account, the CFPB explains, funded by part of your monthly payment. Because property taxes and insurance premiums can change from year to year, your escrow payment and total monthly payment can change too, even on a fixed-rate loan.

In our illustrative example, assume taxes, insurance, and mortgage insurance together come to $550 a month. That's an assumption for the example, not a typical figure; the real number depends heavily on location and the specific home. That leaves:

$2,240 − $550 = $1,690 a month for principal and interest.

If the down payment is under 20%, budget for mortgage insurance. The CFPB says that if you can't put down 20%, lenders usually require private mortgage insurance or a government-backed loan such as FHA, VA, or USDA. Insurance costs also vary a lot by home and location; our guide on what affects homeowners insurance cost explains why.

How interest rates change the answer

Illustrative bar chart of the loan amount that 1,690 dollars a month of principal and interest supports on a 30-year fixed loan at three rates: about 270,181 dollars at 6.40 percent, 244,086 dollars at 7.40 percent, and 221,832 dollars at 8.40 percent

Now turn $1,690 of principal and interest into a loan amount. That depends on the rate and the term. Freddie Mac's Primary Mortgage Market Survey reported a national average of 7.40% for 30-year fixed-rate mortgages as of October 8, 2026, up from 6.30% a year earlier. The survey updates every Thursday, so check the current figure.

Using a standard loan formula on a 30-year fixed loan, $1,690 a month supports about:

Interest rate	Loan amount supported	Home price with 10% down
6.40%	about $270,181	about $300,200
7.40%	about $244,086	about $271,200
8.40%	about $221,832	about $246,500

These figures are illustrative, computed from the example payment, not offers. The pattern is the lesson: a one-point change in rate moves the affordable price by roughly $25,000 to $29,000 in this example. That's why rate shopping and your credit score matter so much, and why a preapproval from months ago may not reflect today's rates.

Loan size can matter too. The Federal Housing Finance Agency set the 2026 baseline conforming loan limit for one-unit properties at $832,750 in most of the U.S. FHFA says this is the limit for mortgages Fannie Mae and Freddie Mac will acquire; higher limits apply in some high-cost areas. Larger loans, often called jumbo loans, can come with different requirements, so ask lenders.

Costs lenders don't see

Costs to include beyond principal and interest, from the CFPB: homeowners insurance, property taxes, private mortgage insurance if required, homeowners association fees, repairs and maintenance, and possibly flood insurance, plus the fact that some costs rise over time

A lender's calculation stops at your debts. Your real budget doesn't. The CFPB lists several things to plan for:

Repairs and maintenance. Owning means you fix the furnace and the roof.
Rising costs. The CFPB notes some home-related costs are likely to rise over time, and suggests checking a home's disaster risk and how it might affect the future availability and cost of homeowners insurance. Flood insurance may be required near high-risk flood areas.
A changing payment. Depending on your loan type, your payment could change. If you're considering an adjustable-rate loan, think about how future, higher payments would fit.
Savings goals. The CFPB's advice is not to sacrifice savings to buy a bigger house. You'll still need to save for emergencies, retirement, and other priorities after you buy.

Then there's upfront cash. Beyond the down payment, the CFPB says to factor in closing costs, which can be substantial, plus moving costs and any immediate repairs. In the illustrative example, 10% down on a $271,200 home is about $27,100 before any closing costs, moving, or reserves.

Set your own number in four steps

Four steps to set your home budget: list your real monthly spending and savings goals, choose a comfortable total housing payment, subtract taxes, insurance, and fees to get principal and interest, then convert that into a loan amount and price and check upfront cash

Here's a practical way to land on a budget that's yours, not the lender's:

Start with your real spending. List what you actually spend each month, including childcare, transportation, and savings for retirement and emergencies. A simple framework like our beginner budgeting guide or the 50/30/20 rule helps.
Pick a comfortable total housing payment. Compare it with your current rent. If the new payment is much higher, try "practice paying" the difference into savings for a few months.
Back out the non-loan costs. Get local estimates for property taxes, insurance, HOA dues, and mortgage insurance. The CFPB suggests asking your insurance agent, local tax assessor, homeowners association, and lender.
Convert to a loan amount and price. Use a mortgage calculator at a realistic current rate, then add your down payment. Finally, check you'll still have cash left for closing and an emergency cushion; see how much to keep in an emergency fund.

An illustrative comparison

Suppose the buyer in our example decides that $1,900 a month total feels comfortable, rather than the $2,240 the rule of thumb allows, because they want to keep saving for retirement. With the same $550 for taxes and insurance, that leaves $1,350 for principal and interest. At 7.40% over 30 years, that supports a loan of about $195,000, or a home price around $216,600 with 10% down. That's about $55,000 less than the 28/36 figure, and it's the number this buyer should give their real estate agent.

Choose the loan that fits, too

The type of loan affects affordability. The CFPB's loan-options guide explains that loan type (conventional, FHA, VA, USDA, or special programs) affects your down payment, total cost, and how much you can borrow, while the loan term affects your monthly payment and total interest. Ask lenders for quotes on more than one option so you can see the trade-offs side by side.

FAQ

How much house can I afford on my salary?

It depends on your debts, the interest rate, taxes and insurance, and your savings goals, not salary alone. A common starting point is the 28/36 rule of thumb: housing at or below 28% of gross monthly income and all debts at or below 36%. Then check that number against your real budget.

What is the 28/36 rule?

It's a rule of thumb, not a legal limit: keep total housing costs to 28% of gross monthly income and total debt payments to 36%. Lenders' actual limits vary; Fannie Mae, for example, allows up to 45% DTI on manually underwritten loans meeting extra requirements and 50% through Desktop Underwriter.

What DTI do lenders want for a mortgage?

The CFPB says different loan products and lenders have different DTI limits. Fannie Mae's Selling Guide sets 36% as its manual-underwriting maximum, up to 45% with credit score and reserve requirements, and 50% for loans run through its automated system.

Does the lender's preapproval amount tell me what I can afford?

No. The CFPB says lenders don't take into account all your family and financial circumstances, and only you can decide how much you're comfortable paying. Treat a preapproval as a ceiling.

Should I include taxes and insurance when figuring affordability?

Yes. The CFPB says homeowners insurance, property taxes, and possibly private mortgage insurance or HOA fees are typically added to your monthly payment. Many lenders collect taxes and insurance through escrow.

How do interest rates affect how much house I can afford?

Higher rates mean the same monthly payment supports a smaller loan. In our illustrative example, $1,690 a month supports about $270,000 at 6.40% but about $222,000 at 8.40% on a 30-year fixed loan.

Do I need 20% down to buy a house?

No. The CFPB says that without 20% down, lenders usually require private mortgage insurance or an FHA, VA, or USDA loan. A larger down payment generally means a lower rate and better approval odds.

Sources

Educational disclaimer: This article is general U.S. consumer-finance education, not financial, legal, tax, or insurance advice, and it is not a recommendation to buy a home or to take out, refinance, or decline any mortgage, loan, or insurance product. FitCreeper Finance does not lend money, broker or service mortgages, sell insurance, or receive pay from companies mentioned here. Mortgage rates, lender pricing, tax rules, and state laws change and vary; confirm details with the official sources linked above, your own Loan Estimate and Closing Disclosure, and, for your situation, a qualified professional such as a HUD-approved housing counselor, a tax professional, or a real estate attorney. Questions or corrections: fryntavo@gmail.com.