With a $70,000 income, $450 in monthly debts and $35,000 saved for a down payment, the 28/36 rule at a 6.75% rate points to a home of about $218,617. The conservative 25/33 rule and the looser 31/43 rule give a range around it.
Price by rule at 6.75%
| Rule | Monthly housing budget | Which limit applies | Maximum price |
|---|---|---|---|
| Conservative 25/33 | $1,458 | housing | $196,930 |
| Conventional 28/36 | $1,633 | housing | $218,617 |
| FHA-style 31/43 | $1,808 | housing | $240,305 |
Price by rate and rule
| Rate | Conservative 25/33 | Conventional 28/36 | FHA-style 31/43 |
|---|---|---|---|
| 5.75% | $211,123 | $234,711 | $258,299 |
| 6.75% | $196,930 | $218,617 | $240,305 |
| 7.75% | $184,377 | $204,383 | $224,388 |
A one-point change in the rate moves the 28/36 price by about $16,093 in this example, because the monthly budget stays the same.
Reading the result
The first number in each rule limits housing cost (principal, interest, tax, insurance, HOA and PMI) as a share of gross income. The second limits housing plus all other debt. The table above shows which limit decides the result. At $450 of monthly debt, the housing limit applies under 28/36.
What we assumed
- Gross income is before tax. Debts are minimum monthly payments (car, student loans, card minimums).
- Property tax 1.2% of price per year, insurance $1,400 per year, PMI 0.7% of the loan when the down payment is under 20%.
- These are rule-of-thumb limits. Lenders also weigh credit score, savings and the property.
- Down payment of $35,000 held constant across rows.
Related calculators: Home Affordability Calculator, Mortgage Calculator.
Questions people ask
Why does the budget depend on debt?
Because the second ratio counts every required debt payment. Paying off a car loan can raise your housing budget by roughly the amount of that payment, once the total-debt limit is the one that applies.
Is the maximum price what I should spend?
Not necessarily. It is the most a rule allows, not a recommendation. Compare the conservative column with your own budget.
Estimates for general education, not financial, tax or legal advice. Real results depend on your lender, employer, tax situation and location. See the disclaimer.