How Much House Can I Afford? The 28/36 DTI Rule Explained

What DTI actually is (and what it isn't)

Your debt-to-income ratio compares two monthly numbers: what you owe and what you earn. Divide what you owe by your gross monthly income (before taxes), multiply by 100. That's it.

DTI = (total monthly debt payments ÷ gross monthly income) × 100

A $3,000 monthly debt load on $8,000 of monthly income is a 37.5% DTI. The details matter, though — lenders count specific things:

Counts as debt: your proposed housing payment (principal, interest, property taxes, insurance — PITI — plus HOA dues and mortgage insurance if they apply), minimum credit card payments (not full balances), car loans, student loans, personal loans, alimony, and child support.

Doesn't count: the rent you're about to replace, utilities, groceries, phone bills, streaming subscriptions, and retirement contributions. Lenders always use gross income — before taxes and deductions.

The 28/36 rule: front-end and back-end explained

The 28/36 rule has two separate ratios:

• Front-end DTI (the "28"): your housing payment alone should be no more than 28% of your gross monthly income. Earn $7,500 a month before taxes, and the full payment — mortgage plus taxes plus insurance — should stay under $2,100.
• Back-end DTI (the "36"): your total monthly debt payments, housing included, should be no more than 36% of gross monthly income. Same income: all debts combined under $2,700.

The back-end number is the one lenders scrutinize most. A modest mortgage with crushing car payments and credit card minimums is riskier than a bigger mortgage with no other debt.

Treat 28/36 as the comfort zone rather than a hard gate. Automated underwriting weighs your whole profile — credit score, down payment, cash reserves — and routinely approves borrowers above 36%. Under 36% is still where approvals come easiest and rate pricing is friendliest.

How lenders actually cap DTI by loan type

Different programs draw the line in different places:

• Conventional (Fannie Mae / Freddie Mac): roughly 28% front-end and 36% back-end. Manually underwritten files go to 45% back-end with good credit and reserves; Fannie Mae's automated Desktop Underwriter can stretch to 50% for strong files.
• FHA: the traditional guideline is 31% front-end and 43% back-end, but the automated system often approves into the high 40s or past 50% when reserves and credit support the file.
• VA: the published back-end guideline is 41%, but VA's real gate is the residual income test — how many dollars you have left each month after every obligation. Clear it and VA can approve files that would sink elsewhere.
• USDA: roughly 29% front-end and 41% back-end, with some room above that for well-qualified files.

One outdated number to drop from your thinking: 43%. That was the old Qualified Mortgage DTI limit, which the CFPB replaced with a price-based standard effective July 1, 2021. DTI still matters and lenders still verify it — it's just not a fixed legal cap anymore.

Walkthrough: calculate your own DTI step by step

Step 1: Find your gross monthly income. Annual salary before taxes ÷ 12. Hourly? Hourly rate × 40 hours × 52 weeks ÷ 12. Overtime and bonuses usually only count with two years of history.

Step 2: Add up your non-housing debts. Every required monthly payment: car loan, student loans, credit card minimums, personal loans, child support. Skip utilities, groceries, and insurance premiums.

Step 3: Estimate your total housing payment (PITI). The mortgage payment isn't the whole story — on a $350,000 home, taxes might add $300 a month and insurance another $150. Rough rule: add about 1.5% of the home price per year, divided by 12, for taxes and insurance in most markets.

Step 4: Do the two divisions. Front-end: housing payment ÷ gross monthly income × 100. Back-end: (housing payment + other debts) ÷ gross monthly income × 100.

Step 5: Compare against your target. Under 28/36, you're in the ideal zone for almost any program. Between 36% and 45% back-end, conventional is still possible with compensating factors. Past that, you'll likely need an FHA loan or to pay down debt first.

The full picture takes a few minutes of honest math — the kind the US Home Affordability (DTI) Calculator does in seconds.

A full worked example: what a couple can actually buy

Let's make this concrete. Priya and Tom, a couple in Austin, earn a combined $120,000 a year — $10,000 a month gross.

Their monthly debts: Priya's car payment $380, Tom's student loan $290, and two credit cards at minimum payments totaling $100. Non-housing debt: $770/month.

First, the 36% comfort-zone target. 36% of $10,000 is $3,600 in total monthly debt. Subtract the $770 in other debts and the max housing payment at the ideal ratio is:

$3,600 − $770 = $2,830/month

What does $2,830 a month buy? At a 30-year fixed rate around 6.5%, roughly $2,030 covers principal and interest on a $320,000 loan, with the remaining $800 going to property taxes, homeowners insurance, and HOA. With 10% down, that points to roughly a $355,000 home.

But Priya and Tom have a 760 credit score and six months of expenses in savings, so their lender approves them at 44% back-end DTI: 44% of $10,000 is $4,400, minus $770 in other debts = $3,630/month for housing. Their buying power stretches to roughly a $440,000 home.

That's an $85,000 spread from the same income. They shop around $380,000, landing at 38% back-end DTI — approved without drama, with enough breathing room that the mortgage never dominates their budget.

Work the math both ways: find your comfort-zone number and your maximum-approval number, then shop somewhere between them.

Mistakes to avoid

Shopping at your max approval. Lenders cap DTI at levels that keep their risk acceptable, not yours. A 44% back-end DTI leaves little room for a medical bill, a job change, or a roof repair. Many planners suggest keeping housing under 25–28% of take-home pay — stricter than the lender's 28% of gross.

Forgetting PITI's full alphabet. Buyers fixate on the mortgage payment and get blindsided by taxes, insurance, PMI, and HOA dues. On a $400,000 purchase, taxes and insurance alone can run $500–$700 a month — if your DTI math used the mortgage payment only, your real ratio is several points higher.

Using net income instead of gross. Lenders use pre-tax income, so running the numbers on take-home pay underestimates what you qualify for — you might self-reject a home you'd actually be approved for. Use gross for lender math, then sanity-check against take-home for comfort.

Making big financial moves mid-process. Financing a car, opening new cards, or co-signing a loan between pre-approval and closing can blow up your DTI and kill the deal. Freeze your credit profile once your application is in.

If you want to test different debt payoffs, income bumps, or price points against the real lender math, the US Home Affordability (DTI) Calculator lets you run the scenarios in a couple of minutes — no sign-up, everything stays in your browser.