The 28/36 rule

Most lenders want your housing payment (principal, interest, taxes and insurance) to stay under 28% of gross monthly income, and all debt payments together under 36%. Some loan programs, including many FHA and conventional loans, allow a total debt ratio up to 43% or higher with strong credit. This calculator uses whichever limit is lower for you.

What raises your budget

Paying off a car loan or credit card frees room under the 36% limit dollar for dollar. A larger down payment lowers the loan, and each 1 percentage point drop in the mortgage rate adds roughly 10% to the price you can afford. Remember to keep cash for closing costs, usually 2% to 5% of the price.