CalcKitTyping a salary into a lender's form and being told "you qualify for $X" feels definitive, but qualification and affordability are two different things. Lenders check whether you are likely to repay; you have to check whether the payment leaves room for groceries, savings and the rest of your life. The good news: both sides use the same simple rule, so you can work out a realistic number yourself in a few minutes.
The 28/36 rule: the lender's yardstick
The classic guideline is called the 28/36 rule, and it uses your gross (pre-tax) monthly income. The 28 means your total housing cost — mortgage principal and interest, property taxes, homeowners insurance and any HOA dues — should stay at or below 28% of your gross monthly income. The 36 means all of your monthly debt payments together — housing plus car loans, student loans and credit cards — should stay at or below 36% of your gross monthly income. Treat the rule as a guideline, not a law: some lenders allow higher ratios, but exceeding it steadily raises the risk of being stretched too thin.
Worked example: $80,000 salary
Say you earn $80,000 a year before tax. That is about $6,667 a month. Under the 28% rule, your maximum total housing payment is 6,667 × 0.28 = $1,867 per month. Now the 36% side: total debts must stay under 6,667 × 0.36 = $2,400 per month. If you already pay $500 a month for a car and student loans, your housing budget shrinks to 2,400 − 500 = $1,900 per month — so the stricter limit here is the $1,867 from the 28% rule. To convert that monthly budget into a home price, feed it into our free Mortgage Calculator together with your down payment and the current interest rate, then adjust the home price until the payment fits.
The 3–5× salary shortcut
Want an even faster answer? As a rough starting estimate, many lenders and financial advisors suggest an affordable home price falls somewhere around 3 to 5 times your annual salary — closer to 3× in expensive markets or with little down, closer to 5× where housing is cheaper. On $80,000 a year that is roughly $240,000–$400,000. It is only a screening number, though: interest rates, property taxes and your existing debts move the real answer more than this shortcut can see, so always check it against the 28/36 math.
Your debts shrink your budget first
This is where the 36% side bites. Lenders look at minimum monthly debt payments, not balances — so a $600 car payment and $400 in student loans eat $1,000 of your 36% debt allowance before housing gets a cent. Clearing even one debt before you apply can visibly raise your affordable home price. Also note the rule uses gross income, which flatters the numbers; your actual take-home is smaller, so many buyers treat 28% of gross as a ceiling and aim a little under it for breathing room.
Taxes, insurance and maintenance: the hidden costs
The monthly mortgage payment is only part of homeownership. Property taxes and homeowners insurance are often bundled into the payment through an escrow account, and they can add 20–40% on top of principal and interest in high-tax areas. Then there is maintenance — the old rule of thumb is to budget about 1% of the home's value per year for repairs. When you run the numbers, include all of these in your 28% housing budget, not just the loan payment.
Qualification is not affordability
A lender may approve you for more than the 28/36 rule suggests — approval measures their risk, not your comfort. Two people with the same salary can afford very different homes if one has heavy student debt and the other has none, or if one needs to keep saving aggressively for retirement. Decide on your own comfortable payment first, using the rule above, and treat any bigger approval number as a warning sign rather than a target.
📚 Related guide: Wondering whether buying even makes sense right now? Our How Much of Your Salary Should Go to Rent? guide explains the 30% rent rule, and our Rent vs Buy Calculator compares both options with your own numbers.