How Much House Can You Actually Afford? The 28/36 Rule
beginner Before you ever ask 'rent or buy?', there's a more basic question: how much house can you actually afford? The answer almost nobody is taught is that lenders don't cap you by price — they cap your monthly PAYMENT, as a share of your gross income. Two debt-to-income (DTI) ratios do the work: the front-end rule says your housing payment shouldn't exceed about 28% of gross monthly income, and the back-end rule says that payment plus every other debt you carry shouldn't exceed about 36%. Whichever is lower is your real budget — and everything else, including the price tag you can shop for, is worked backwards from it. This lesson inverts the mortgage math so you can drag your income, down payment, rate, and existing debts and watch the affordable price move. Two truths jump out. First, the interest rate is the hidden lever: at the same income, a few points of rate can swing your price by tens of thousands of dollars, because you're buying a payment, not a number. Second, your other debts come straight out of your housing budget through the 36% rule — a car loan or student-loan payment doesn't just cost its own dollars, it quietly shrinks the house you qualify for. Knowing the real number before you shop keeps you from falling in love with a home a lender will never approve — or, worse, one they will approve that leaves you 'house poor.'