A colleague earning $95,000 got preapproved for $520,000 — and felt sick imagining the payment. Preapproval is a lender's maximum, not your budget. How much house can I afford has a better answer: the 28/36 rule converts income and debts into a payment ceiling, and the payment converts into a price. Here is that chain with worked numbers.
Part of the mortgage calculator guide. Run your numbers in the home affordability calculator, then price payments in the mortgage calculator.
For informational purposes only — not financial advice. Estimates may vary; consult a qualified financial advisor for decisions. See /terms.
The 28/36 rule (with a worked paycheck)
Gross monthly income $7,500 ($90k/year). Housing ceiling: 28% → $2,100 for PITI. All-debts ceiling: 36% → $2,700; with $800 car + student payments, mortgage room = $1,900. That $1,900 — not the listing price — is the search filter. At illustrative 6%/30yr, $1,900 P&I supports roughly a $316,000 loan; plus 20% down, roughly a $395,000 home. Change the debts to $1,500 and the same income buys far less house — debts move affordability more than most buyers expect.
The 4 inputs lenders actually weigh
| Input | What helps | What hurts |
|---|---|---|
| Income (gross) | Stable salary, documented bonuses | Unverifiable gig income |
| Debts (monthly) | Paid-off car, low cards | $800+ in installments |
| Down payment | 20%+ (no PMI, smaller loan) | Under 5% (PMI + higher rate) |
| Credit profile | 750+ score, clean history | Recent misses, maxed cards |
- DTI is the gate: preapproval, rate tier and PMI all key off debt-to-income. Pay down a $400/month car loan and watch the ceiling jump ~$50,000 in price.
- Down payment is the lever: each extra 5% down cuts the loan, the rate tier and eventually PMI. Strategy in down payment & PMI guide.
- Do not max preapproval: lenders ignore daycare, savings goals and job risk. Leave 10–15% buffer under the ceiling for life.
Co-borrowers and single incomes (edge cases)
Two salaries change everything and nothing: combined gross raises the ceiling, but combined debts count fully — a partner's $600 student payment erases ~$75,000 in price power. Single-income households should stress-test at 25% housing, not 28: one job means zero fallback, and lenders' maxima assume uninterrupted pay. Divorce-buyout planners: the awarded home's full payment must fit one income under 36% DTI or the settlement math may fail at refinance — confirm with your attorney and lender. Run each scenario separately in the affordability calculator before committing jointly — 10 minutes now beats an unaffordable approval later.
From payment to price: the conversion chain
Payment ceiling → subtract tax/insurance/PMI/HOA → P&I budget → invert the EMI formula at your rate and tenure → loan amount → divide by (1 − down-payment %) → home price. The affordability calculator runs this chain instantly; the mortgage calculator then stress-tests the price at 5%, 6% and 7%. Buying together? Use combined gross income but combined debts too — one partner's student loans count fully. Self-employed? Lenders average 2 years of documented income; keep returns clean starting 2 years before house-hunting. India buyers: run the same chain in lakh with FOIR caps via the EMI calculator and India eligibility guide.
Rates and examples as of Sept 2026, illustrative only — not a lender offer. Excludes taxes, insurance, PMI, HOA, fees and ARM resets.
The buffer rule: why approval ≠ affordable
Lenders approve to the edge; life happens past it. After computing the 28/36 ceiling, subtract real life: daycare ($1,000–2,000), one car replacement cycle, 3% annual tax creep, and a job-loss reserve of 6 months PITI kept liquid. My rule: the signed payment should survive one income dropping 30% for 6 months without touching retirement. On the $7,500-income example, that means targeting ~$1,700 not $1,900 — the $200 gap buys sleep and staying power. Buyers who max approvals discover this math during the first emergency; buyers who buffer discover it never. Affordability is not the maximum loan — it is the maximum payment that leaves life intact.
For informational purposes only — not financial advice. Estimates may vary; consult a qualified financial advisor for decisions. See /terms.