Before you scroll listings in a new city, it helps to know your number: the most you can comfortably pay for a home. The simplest starting point lenders and planners use is the 28% rule.
What is the 28% rule?
The 28% rule says your monthly mortgage payment should be no more than 28% of your gross (pre-tax) monthly income. It is a guideline, not a law — lenders also look at your total debt, credit score and savings — but it is a sensible first filter.
On a $100,000 household income, gross monthly income is about $8,333. Twenty-eight percent of that is roughly $2,333 a month for principal and interest.
What that buys at today's rates
The 30-year fixed rate averaged 7.03% in Freddie Mac's survey on September 24, 2026. Using that rate, a 30-year loan and a 20% down payment, here is the maximum home price the 28% rule supports (principal and interest only):
| Household income | 28% monthly budget | Max price at 6.00% | Max price at 7.03% | Max price at 8.00% |
|---|---|---|---|---|
| $75,000 | $1,750 | $364,857 | $327,804 | $298,120 |
| $100,000 | $2,333 | $486,476 | $437,073 | $397,494 |
| $150,000 | $3,500 | $729,713 | $655,609 | $596,240 |
Two things stand out. First, a single percentage point in rate changes buying power by roughly 8–10%. Second, at a $100,000 income, the budget lands almost exactly at the U.S. national median single-family price of $434,900 (NAR, Q2 2026) — but well short of the most expensive coastal metros.
Try your own numbers: our affordability checker runs the same calculation and compares the result with metro medians.
What the 28% rule leaves out
- Property taxes and insurance. These can add hundreds of dollars a month, and both vary widely by city.
- HOA fees. Common for condos and townhomes in urban areas.
- Mortgage insurance (PMI). Usually required with less than 20% down.
- Your other debts. Lenders also check total debt-to-income, often around 36% or higher depending on the loan type.
Because of these extras, many buyers aim for a payment comfortably below the 28% line, especially in high-tax or high-HOA cities.
A simple way to use it
- Work out 28% of your gross monthly income.
- Subtract an estimate for taxes, insurance and HOA in your target city.
- Use what is left as your principal-and-interest budget.
- Compare the resulting price with the metro medians for the cities you are considering.
The rule will not make the decision for you, but it keeps your search grounded in numbers before you fall for a listing.