What is the 28/36 rule for home affordability?

The 28/36 rule says housing costs (PITI) should be no more than 28% of gross monthly income, and total debts should be no more than 36%. Lenders use these ratios to qualify borrowers.

What does PITI stand for in mortgages?

PITI stands for Principal, Interest, Taxes, and Insurance. It represents the total monthly housing cost used to calculate your front-end debt-to-income ratio.

How much income do I need for a $400,000 home?

At 7% rate with 20% down, monthly P&I is ~$2,129. Adding taxes and insurance brings PITI to ~$2,500-2,800. Using the 28% rule, you'd need at least $8,900-10,000/month gross income ($107k-120k/year).

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Understanding Home Affordability

The 28/36 rule is a widely-used guideline for determining how much home you can afford. The "28" refers to the maximum percentage of your gross monthly income that should go toward housing costs (principal, interest, taxes, and insurance — or PITI). The "36" refers to the maximum percentage of income that should cover all monthly debts combined. Our Mortgage Calculator can help you fine-tune your monthly payment once you've settled on a home price.

Your down payment plays a critical role in affordability. A larger down payment reduces your loan amount, lowers monthly payments, and may eliminate the need for private mortgage insurance (PMI). Use our Down Payment Calculator to build a savings plan toward your target down payment amount.

Keep in mind that lender qualification requirements may differ from these guidelines. Factors like your credit score, employment history, and local housing market conditions also affect how much you can borrow. This calculator uses general guidelines to give you a solid starting point — always consult with a mortgage professional before making purchasing decisions.

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For a related calculation, use Down Payment Calculator to calculate how long to save for a down payment and compare different down payment amounts. Alternatively, use Auto Loan Calculator to calculate car loan payments including trade-in value, down payment, and sales tax.

For the underlying method, read How to Calculate a Mortgage Payment: Principal, Interest, and the Real Monthly Cost or How Much House Can You Actually Afford?.