The 28/36 Rule for Home Buying: How Much House Can You Really Afford?

Buying a home is exciting, but one of the biggest mistakes buyers make is focusing on the price of a house before understanding what they can comfortably afford each month.

You might qualify for a mortgage that looks affordable on paper, only to discover that property taxes, homeowners insurance, utilities, and other expenses stretch your budget further than expected.

That is where the 28/36 rule for home buying can help.

This simple mortgage affordability guideline gives buyers a starting point for understanding how much of their income should go toward housing and total debt. If you are planning to buy a home in Connecticut, understanding this rule before you start house hunting can help you make more confident financial decisions.

Let's break down how it works, look at a real-world example, and explain why the amount a lender approves is not necessarily the amount you should spend.

What Is the 28/36 Rule for Home Buying?

The 28/36 rule is a traditional guideline used to evaluate mortgage affordability. It compares your gross monthly income with your expected housing expenses and other monthly debt payments.

The rule has two parts:

• The 28% rule: Aim to keep your monthly housing expenses at or below 28% of your gross monthly income.
• The 36% rule: Aim to keep your combined monthly housing expenses and other recurring debt payments at or below 36% of your gross monthly income.

Gross income is your income before taxes and other deductions.

These percentages are guidelines, not universal mortgage approval requirements. Some lenders allow higher debt-to-income ratios, depending on the loan program, credit profile, assets, and other factors.

However, the rule can provide a useful starting point when deciding what monthly payment fits your financial situation.

How the 28% Rule Works

The first part of the rule focuses on your monthly housing costs.

These costs generally include:

• Mortgage principal and interest
• Property taxes
• Homeowners insurance
• Private mortgage insurance, if applicable
• Homeowners association fees, if applicable

A common mistake is calculating affordability using only the mortgage principal and interest. Your complete monthly housing payment may be substantially higher once the other expenses are included.

Example: What If You Earn $8,000 a Month?

Suppose your gross household income is $8,000 per month.

Using the 28% guideline:

$8,000 × 0.28 = $2,240

Your target monthly housing expense would be approximately $2,240.

That figure is a starting point for your total monthly housing costs, not just the amount going toward your mortgage principal and interest.

For example, if property taxes, insurance, and other applicable housing charges total $650 per month, approximately $1,590 would remain for mortgage principal and interest.

This is an illustrative calculation. Your actual affordability will depend on your loan terms, interest rate, taxes, insurance, and other financial commitments.

How the 36% Rule Works

The second part of the rule considers your total monthly debt obligations.

These may include:

• Your proposed housing payment
• Car loans
• Student loans
• Minimum credit card payments
• Personal loans and other recurring debt obligations

Using the same $8,000 monthly gross income:

$8,000 × 0.36 = $2,880

Under this guideline, your combined housing expenses and other monthly debt payments would total no more than $2,880.

Let's say you have $600 in monthly payments on a car loan and student loans.

That leaves $2,280 under the 36% guideline for housing.

Because the 28% guideline suggests a housing budget of $2,240, that lower amount would be your initial target in this example.

The key takeaway? Your existing debt can influence how much house makes sense for your budget.

What Does the 28/36 Rule Mean for Connecticut Home Buyers?

If you are buying a home in Connecticut, there are additional local expenses worth considering before deciding on a purchase price.

1. Property Taxes Can Make a Significant Difference

Property taxes vary by municipality and property. Two homes with similar purchase prices can have different annual tax bills.

Before making an offer, investigate the property's current assessment, applicable mill rate, and estimated annual taxes. Remember that assessments and tax bills can change.

2. Mortgage Approval Is Not the Same as Affordability

A lender evaluates your financial profile using the requirements of its loan program. Its maximum approved payment may be higher than the amount you would personally feel comfortable paying.

Think about your everyday lifestyle, too. You may want to continue saving for retirement, traveling, maintaining an emergency fund, or paying for other family expenses.

The right home should fit your life—not force every other financial goal to take a back seat.

3. Homeownership Comes With Expenses Beyond the Mortgage

Owning a home can involve repairs, routine maintenance, heating and cooling costs, water expenses, and other utilities.

Older homes may need more maintenance than newer properties. A property with a large yard or additional systems may also require more upkeep.

Build room for these expenses into your budget instead of committing every available dollar to your monthly housing payment.

4. Your Down Payment Matters, but So Does Your Cash Reserve

A larger down payment may reduce your loan amount and monthly principal and interest payment. Depending on the loan, it may also help you avoid mortgage insurance.

However, using all your savings for a down payment and closing costs can leave you financially vulnerable after moving in.

Before purchasing, consider how much cash you will have remaining for emergencies, repairs, moving expenses, and unexpected bills.

Is the 28/36 Rule Always Accurate?

No. The rule is a helpful guideline, but it does not account for every financial situation.

For example, a household with no other debt and substantial savings may comfortably manage a higher housing payment than the traditional guideline suggests.

On the other hand, a household with childcare expenses, variable income, significant medical expenses, or other financial responsibilities may need a much lower housing budget.

Your credit score, loan program, interest rate, down payment, and lender requirements also affect mortgage eligibility.

That is why I recommend treating the 28/36 rule as a starting point rather than a final answer.

The goal is not simply to qualify for a mortgage. It is to find a home you can afford while maintaining financial flexibility.

Five Steps to Determine How Much House You Can Afford

Before scheduling showings, take these five steps.

Step 1: Calculate your gross monthly household income.

Include reliable income sources that your lender can document and consider how stable that income is.

Step 2: List your existing monthly debt payments.

Include your car loan, student loans, credit card minimums, and other recurring obligations.

Step 3: Estimate your complete monthly housing costs.

Account for mortgage principal and interest, property taxes, homeowners insurance, mortgage insurance, and applicable association fees.

Step 4: Account for expenses outside the mortgage.

Estimate utilities, maintenance, repairs, moving expenses, and your normal living costs.

Step 5: Speak with a qualified mortgage professional and establish your budget.

A lender can explain available mortgage programs, estimated payments, and qualification requirements. You can then determine a comfortable purchase budget based on your broader financial goals.

Taking these steps before you fall in love with a property can help you shop with greater confidence and avoid unnecessary disappointment.

The Bottom Line: Buy a Home That Fits Your Life

The 28/36 rule for home buying is a simple way to start thinking about mortgage affordability. It can help you understand the relationship between your income, housing expenses, and existing debt.

But the best home-buying decision is not necessarily the home with the highest purchase price your lender will approve.

It is the home that meets your needs, fits your budget, and allows you to feel financially comfortable after closing.

If you are planning to buy a home in Connecticut, preparing your finances early can make the entire process less stressful.

Thinking About Buying a Home in Connecticut?

At Homes by Jim Boyles, my goal is to help buyers understand their options, evaluate properties, and navigate the home-buying process with a clear plan.

Whether you are a first-time buyer, moving to a new town, or preparing for your next chapter, I can help you take the next step with confidence.

Ready to start planning your purchase? Reach out to Homes by Jim Boyles to discuss your goals and develop a home-buying strategy that fits your needs.

This article provides general educational information and is not financial, tax, or mortgage advice. Mortgage qualification standards vary by lender and loan program. Consult a qualified mortgage professional about your individual circumstances.