Two answers: what a lender will approve, and what your budget can genuinely sustain.
Maximum home price
$367,398
What a lender would likely approve using the 28/36 rule.
Housing held to 22% of gross income.
On $110,000 of gross income with $550 of existing monthly debt, the 28/36 rule supports about $2,567 a month toward housing. With $65,000 down at 6.65%, that reaches roughly $367,398 — a $302,398 loan at 17.7% down. Your resulting debt-to-income ratio would be 34%, and you are currently limited by the housing ratio.
The 28% ceiling assumes no childcare, no aggressive retirement saving, and stable income. Holding housing to 22% of gross income — about $2,017 a month — supports roughly $311,320 and leaves $550 a month for retirement contributions, maintenance and the irregular costs that arrive every year. Buyers who stretch to the maximum are the ones who stop contributing to retirement.
Reaching 20% on a $367,398 home requires $73,480 — $8,480 more than you have. PMI at roughly 0.55% annually would add about $139 a month until you reach 20% equity. Buying a less expensive home is the other route to clearing the threshold with the cash you already have.
A $311,320 home means roughly $2,017 a month all-in. Run it through the mortgage calculator to see the full breakdown, and check the rent vs buy comparison if there is any chance you move within five years.
Full payment breakdownProperty tax rates, insurance costs and income tax vary enormously between states. These versions load local averages so you start from a realistic baseline.
Worked scenarios with the full analysis, so you can see how the numbers move before entering your own.
A dual-income household with a car payment and student loans, shopping in a mid-priced market.
Maximum home price
$367,398
On $110,000 of gross income with $550 of existing monthly debt, the 28/36 rule supports about $2,567 a month toward housing. With $65,000 down at 6.65%, that reaches roughly $367,398 — a $302,398 loan at 17.7% down. Your resulting debt-to-income ratio would be 34%, and you are currently limited by the housing ratio.
The 28% ceiling assumes no childcare, no aggressive retirement saving, and stable income. Holding housing to 22% of gross income — about $2,017 a month — supports roughly $311,320 and leaves $550 a month for retirement contributions, maintenance and the irregular costs that arrive every year. Buyers who stretch to the maximum are the ones who stop contributing to retirement.
Reaching 20% on a $367,398 home requires $73,480 — $8,480 more than you have. PMI at roughly 0.55% annually would add about $139 a month until you reach 20% equity. Buying a less expensive home is the other route to clearing the threshold with the cash you already have.
A first-time buyer with modest savings and no other debt, seeing what a starter home budget looks like.
Maximum home price
$231,947
On $75,000 of gross income with $0 of existing monthly debt, the 28/36 rule supports about $1,750 a month toward housing. With $25,000 down at 6.65%, that reaches roughly $231,947 — a $206,947 loan at 10.8% down. Your resulting debt-to-income ratio would be 28%, and you are currently limited by the housing ratio.
The 28% ceiling assumes no childcare, no aggressive retirement saving, and stable income. Holding housing to 22% of gross income — about $1,375 a month — supports roughly $183,317 and leaves $375 a month for retirement contributions, maintenance and the irregular costs that arrive every year. Buyers who stretch to the maximum are the ones who stop contributing to retirement.
Reaching 20% on a $231,947 home requires $46,389 — $21,389 more than you have. PMI at roughly 0.55% annually would add about $95 a month until you reach 20% equity. Buying a less expensive home is the other route to clearing the threshold with the cash you already have.
A high earner whose car and student loan payments materially reduce borrowing capacity.
Maximum home price
$504,736
On $180,000 of gross income with $2,200 of existing monthly debt, the 28/36 rule supports about $3,200 a month toward housing. With $120,000 down at 6.65%, that reaches roughly $504,736 — a $384,736 loan at 23.8% down. Your resulting debt-to-income ratio would be 36%, and you are currently limited by the total debt.
The 28% ceiling assumes no childcare, no aggressive retirement saving, and stable income. Holding housing to 22% of gross income — about $3,200 a month — supports roughly $504,736 and leaves $0 a month for retirement contributions, maintenance and the irregular costs that arrive every year. Buyers who stretch to the maximum are the ones who stop contributing to retirement.
Your $2,200 of monthly debt payments consumes 15% of gross income and directly reduces what you can borrow. Every $100 of monthly debt eliminated adds roughly $15,500 to your maximum price at current rates. Paying off a car loan before applying is often worth more than saving the equivalent amount for the down payment.
Plan your debt payoffThe 28/36 rule is the standard underwriting heuristic: housing costs should stay under 28% of gross monthly income, and all debt payments combined under 36%. Whichever limit binds first sets your ceiling.
It is a useful starting point and a poor stopping point. The rule was designed to protect lenders from default, not to protect you from a financially uncomfortable decade. It makes no allowance for childcare, which can exceed a mortgage payment; for retirement contributions, which it treats as optional; or for the maintenance costs that arrive whether you budgeted for them or not.
A lender evaluates whether you will repay the loan. That is a narrower question than whether the purchase leaves you able to fund retirement, absorb a job loss, or replace a roof.
The practical consequence is that the approved amount is a ceiling rather than a recommendation. Buyers who purchase at their maximum are the ones who stop contributing to retirement accounts, carry credit card balances through minor emergencies, and describe themselves as house poor. Holding housing to roughly 22% of gross income rather than 28% preserves the margin that makes ownership comfortable rather than precarious.
Three levers move your maximum price, and they are not equally effective. Reducing monthly debt is usually the most powerful per dollar spent — every $100 of eliminated monthly payment adds roughly $15,000 to your borrowing capacity at current rates, because it frees back-end ratio capacity directly.
Raising your credit score is second. The pricing difference between a 680 and a 760 score is commonly 0.4–0.6 percentage points, which on a $400,000 loan changes the payment by well over $100 a month and shifts your ceiling accordingly. Increasing the down payment is third: it helps, but a dollar of down payment buys roughly a dollar of house, whereas a dollar of eliminated monthly debt buys many times that.
Lenders underwrite against default risk, not against your quality of life. The approved figure ignores childcare, retirement saving and maintenance entirely.
The 28/36 rule uses gross income. Applying it to net pay produces a figure roughly 25–30% too low and can talk you out of a purchase you can genuinely afford.
The same $400,000 home costs roughly $180 a month in tax in Hawaii and over $740 in New Jersey. National affordability rules of thumb ignore a difference that large.
A bigger down payment with no reserves converts the first unexpected repair into credit card debt at 24% interest.
Fixing an error or paying down utilization takes 30–60 days and can move your rate by half a point. Doing it after you are under contract is too late.
With no other debt and a 10% down payment at current rates, roughly $250,000–290,000 under the 28% rule, depending on your property tax rate. A more comfortable target that preserves retirement saving is closer to $200,000–235,000. Existing car or student loan payments reduce both figures substantially.
At 6.65% with 10% down, a $400,000 home costs roughly $3,100 a month all-in. The 28% rule implies about $133,000 of gross household income to support that comfortably, or around $105,000 if you stretch to the 36% back-end limit with no other debt. In low-property-tax states the requirement drops by several thousand dollars of income.
Indirectly, through the interest rate you enter. Credit score's main effect on affordability is the rate you are offered — the difference between a 680 and 760 score is commonly 0.4–0.6 percentage points. Enter a realistic rate for your score rather than the best advertised rate, since advertised rates assume excellent credit and substantial down payments.
Include it if both of you will be on the loan. If only one spouse applies, only that income counts — but the lender still counts both spouses' debts in community property states. Applying with one borrower is sometimes worthwhile when the other has poor credit, since lenders price from the lower of the two scores.
Closing costs of 2–5% of the purchase price, plus an intact emergency fund of three to six months of expenses, plus a moving and immediate-repairs buffer. On a $400,000 home that is roughly $10,000–20,000 in closing costs on top of the down payment. Arriving at closing with nothing left is the most common avoidable mistake in home buying.
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Guides that explain the decisions behind these numbers.
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