The 28/36 rule, what lenders actually look at, and how to run your own numbers before you start touring homes.
Most affordability guidance starts with the same rule of thumb: keep your monthly housing costs — principal, interest, taxes, insurance, and any HOA dues — under 28% of your gross (pre-tax) monthly income. Then keep your total monthly debt payments, including housing plus car loans, student loans, and credit cards, under 36%.
These aren't laws — they're a widely used starting point that balances what a lender will typically approve against what leaves enough room in your budget for everything else in life.
When you apply for a mortgage, a lender calculates your debt-to-income ratio (DTI) using your gross income and all your monthly debt obligations, then compares it against their approval thresholds — which are often looser than the 28/36 guideline, especially for well-qualified borrowers. This is exactly why it's possible to get approved for more house than you might actually want to comfortably afford.
A bigger down payment does three things at once: it lowers your loan amount (and therefore your monthly payment), it can eliminate private mortgage insurance if you reach 20% down, and it reduces the total interest you'll pay over the life of the loan. Even an extra 5% down can meaningfully shift your monthly number.
It's common for a lender's maximum approval to be noticeably higher than what actually feels comfortable once you account for savings goals, other expenses, and the general unpredictability of life. Treat your approval amount as a ceiling, not a target.
Rather than relying on a lender's pre-approval alone, plug your actual numbers into a mortgage calculator to see the full monthly picture — principal, interest, taxes, insurance, and PMI — before you start touring homes.
Try it with your own numbers:
See your full monthly payment — P&I, taxes, insurance, and PMI — for any home price and down payment.
Open the mortgage calculator →A clear picture of your overall finances before taking on a mortgage.
Open the net worth calculator →A guideline suggesting your monthly housing costs stay under 28% of your gross monthly income, and your total debt payments (including housing) stay under 36%. It's a starting point lenders and advisors use, not a hard legal limit.
Yes, significantly — a larger down payment lowers your loan amount and monthly payment, and can eliminate PMI if it reaches 20% of the home price.
Not necessarily. Lenders calculate the maximum you qualify for based on debt ratios, not what's comfortable for your actual budget and goals — many financial advisors suggest staying below your maximum approval amount.