The 28/36 rule, a worked example, and the honest reason the bank approves more than your smart number.
Lenders and financial planners have used the same two numbers for decades. Spend no more than 28% of your gross monthly income on housing (mortgage payment, property tax, insurance, HOA), and no more than 36% on all debt combined — housing plus car payments, student loans, and credit card minimums.
Example: you earn $100,000 a year, which is $8,333 a month before tax. The 28% line puts your housing budget at $2,333 a month, all-in. If you also pay $450 for a car and $250 in student loans, the 36% line ($3,000 total debt) leaves $2,300 for housing — the tighter number wins, and that becomes your real budget.
At a 6.5% rate on a 30-year loan with 20% down, a $2,300 monthly budget translates to roughly a $330,000 house: about $1,670 in principal and interest on the $264,000 loan, plus roughly $450 in property tax and insurance. Change the rate, the down payment, or your county and the answer moves — which is why a calculator beats a rule of thumb. Run your exact numbers in the mortgage calculator and check your state's typical rate in the property tax calculator.
One more honest input: budget from your actual take-home pay, not your salary. Taxes, 401(k) and health insurance take their cut first — the paycheck calculator shows what really lands in your account.
Lenders routinely approve loans at 43–50% debt-to-income, because their models care about whether you can pay, not whether you will have a life while doing it. The gap between "approved" and "comfortable" is where house-poor households are made: a maxed budget leaves nothing for maintenance (plan on ~1% of the home's value per year), insurance hikes, or a job hiccup.
A useful stress test: would the payment still work if your household income dropped 10% for six months? If not, aim lower. The market will still be there.
The down payment isn't the whole check. Closing costs typically run 2–5% of the price — lender fees, title insurance, transfer taxes, plus a year of insurance and a few months of property tax paid upfront. On a $330,000 house that's roughly $7,000–$16,000 on top of the down payment. Get the itemized version from the closing cost calculator before you fall in love with a listing.
Bottom line: 28% of gross on housing, 36% on all debt, stress-test the payment, budget the closing cash. That's the whole framework — the calculators handle your local numbers.
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