Key takeaway
On $100,000 gross income: the 28% rule allows $2,333/month for housing (PITI), and the 36% rule allows $3,000/month for all debt combined. With 20% down and a 30-year fixed at 6.75%, the 28% budget backs into a ~$349,000 purchase price (~$70,000 down). But if you carry $900/month in car and student debt, the 36% cap binds first and your max price falls to ~$311,000.
The 28/36 rule in one minute
Mortgage underwriters have used this guideline for decades. Two ratios, both on gross (pre-tax) income:
- Front-end (28%): housing costs — principal, interest, property tax, homeowner's insurance (PITI) — ≤ 28% of gross monthly income.
- Back-end (36%): housing plus all other recurring debt — car loans, student loans, credit card minimums — ≤ 36% of gross monthly income.
On $100,000/year ($8,333/month gross):
- Housing budget: $8,333 × 28% = $2,333/month
- Total debt budget: $8,333 × 36% = $3,000/month
Your actual approval is the lower of what each ratio allows. Most first-time buyers trip on the second one.
The algebra: from $2,333/month to a purchase price
Assumptions: 20% down (loan = 80% of price), 30-year fixed at 6.75%, property tax 1.1%/year of the price, insurance $200/month.
First, the monthly payment per $1 of mortgage at 6.75% over 360 months:
- Monthly rate = 6.75% ÷ 12 = 0.5625% → payment factor ≈ $0.006486 per $1 borrowed
- So each $100,000 of loan costs about $649/month in principal and interest.
Now build the PITI equation, with P = purchase price:
- P&I: 0.80 × P × 0.006486 = 0.005189 × P
- Tax: (1.1% × P) ÷ 12 = 0.000917 × P
- Insurance: $200
Set PITI equal to the budget and solve:
- 0.005189P + 0.000917P + 200 = 2,333.33
- 0.006106P = 2,133.33
- P ≈ $349,000
What $349,000 looks like monthly
- Down payment (20%): ≈ $69,900 — due at closing, plus closing costs
- Loan: $279,500 → P&I: $1,813/month
- Property tax (1.1%/yr): $320/month
- Insurance: $200/month
- Total PITI: $2,333/month ✓ — exactly the 28% budget
When the 36% rule binds: the debt haircut
The 28% math assumed zero other debt. Now add reality: a $500/month car payment and $400/month in student loans — $900/month total.
Under the 36% rule, all debt must fit in $3,000/month. Housing gets what's left:
- Housing budget: $3,000 − $900 = $2,100/month
- Solve the same equation: 0.006106P + 200 = 2,100 → P ≈ $311,000
The $900/month in other debt erased ~$38,000 of house. The rule of thumb falls right out of the algebra: every $100/month of recurring debt costs you roughly $16,400 of purchase price. Paying off a $350/month car loan before house-hunting is worth ~$57,000 of house — often more than the car's remaining balance.
Gross vs. take-home: the rule's blind spot
The 28/36 rule runs on gross income — but you pay the mortgage with take-home pay. On $100K gross, after federal tax, FICA, and state tax, take-home might be ~$68,000–$72,000/year (~$5,700–$6,000/month). Against that:
- $2,333/month housing is 39–41% of take-home — not 28%.
The rule is a lender's risk guideline, not a personal budget. Before committing, run your actual paycheck through our take-home pay calculator and ask whether the PITI leaves room for savings, maintenance (~1%/year of the home's value), and life. Many buyers target 25% of take-home as their personal ceiling — which on these numbers would mean ~$1,450–$1,500/month in housing, a notably smaller house than the bank will approve.
What moves the number most
- Interest rate: at 6.75%, each 0.5-point rate move shifts the max price by roughly $20,000–$25,000. Rate matters more than most buyers expect — and it's the one variable you can't control.
- Down payment: less than 20% doesn't buy more house — the bigger loan plus PMI (roughly 0.5–1%/year until 20% equity) shrinks what the payment budget supports.
- Property tax: 1.1% is a national-ish middle; at 2%+ (common in NJ, IL, TX), tax alone eats $580+/month of the budget on a $349K home — rework the equation with your county's rate.
- Other debt: as shown above — $100/month of debt ≈ $16,400 of house. Nothing else in the equation is this actionable.
The bottom line
On $100K with 20% down at 6.75%: ~$349,000 if you're debt-free, ~$311,000 with $900/month in other debt. The 28% rule sets the ceiling; the 36% rule usually sets the reality. And both run on gross income — check the payment against your take-home before you fall in love with the ceiling.
Test it on your numbers
Our free rent vs. buy calculator compares buying at your price against renting — including the opportunity cost of that $70,000 down payment. And take-home pay shows what the payment really costs against your actual paycheck.
Related calculators
- Rent vs Buy — the 5% rule and the time horizon that decides.
- Take-Home Pay — what the mortgage really costs against your paycheck.
- Mortgage Payoff — how extra payments shorten your loan.
Frequently asked questions
What is the 28/36 rule for buying a house?
The 28/36 rule is the traditional mortgage underwriting guideline: spend no more than 28% of gross monthly income on housing (principal, interest, taxes, insurance) and no more than 36% on all debt combined, including car loans, student loans, and credit card minimums. On a $100,000 salary that's $2,333/month for housing and $3,000/month for total debt. Lenders use these ratios to decide how much to approve.
How much house can I afford on a $100K salary?
Under the 28% rule ($2,333/month for housing), with 20% down and a 30-year fixed mortgage at 6.75%, you can afford roughly a $349,000 home — about a $280,000 loan with $1,813 in principal and interest, $320 in property tax, and $200 in insurance. That assumes no other debt; car or student loan payments reduce it under the 36% rule.
How does the 36% rule limit my home price?
The 36% cap covers all monthly debt. On $100K that's $3,000/month total. If you already pay $900/month in car and student loans, only $2,100/month remains for housing — which drops your max price from about $349,000 to about $311,000, a $38,000 haircut. Roughly every $100/month of other debt costs you $16,400 of house.
Does the 28/36 rule use gross or net income?
Gross — pre-tax income. That's worth remembering because the rule can feel generous: 28% of gross is a bigger slice of your take-home pay. On $100K gross in a typical tax situation, $2,333/month in housing can be 35%+ of actual take-home. Run your real paycheck through a take-home pay calculator and sanity-check the payment against net income, not gross.
Can I afford more house with less than 20% down?
A smaller down payment buys less house, not more: the loan gets bigger, so principal and interest rise, and you'll usually pay private mortgage insurance (PMI) of roughly 0.5–1% of the loan per year until you reach 20% equity. With 10% down at the same payment budget, the max price falls because PMI and the larger loan eat the $2,333/month. The 20% down in our example is doing real work.
Last updated: September 27, 2026