The 28/36 rule: the foundation of mortgage affordability
- Monthly housing costs (PITI) should not exceed 28% of gross monthly income.
- Total monthly debt payments should not exceed 36% of gross monthly income.
On a $100,000 annual salary ($8,333/month gross), the 28% rule limits your housing payment to $2,333/month.
How much house does that buy in 2026?
- $1,500/month payment → approximately $220,000–240,000 home (with 20% down)
- $2,000/month payment → approximately $290,000–320,000 home
- $2,500/month payment → approximately $365,000–400,000 home
- $3,000/month payment → approximately $435,000–480,000 home
Down payment options in 2026
Conventional loan (3–20% down): Putting less than 20% down triggers PMI at 0.5–1.5% of the loan annually.
FHA loan (3.5% down): Requires a minimum 580 credit score.
VA loan (0% down): Available to US veterans, active military, and surviving spouses. No PMI.
USDA loan (0% down): Available for rural properties meeting USDA requirements.
The credit score impact on your mortgage rate
The difference between a 680 and 760 score on a $300,000 mortgage can be 1–1.5 percentage points — a difference of $201/month or $72,360 over the loan term.