The 28% Rule

Lenders have a guideline: your mortgage payment — including taxes and insurance — shouldn't exceed 28% of your gross monthly income. This is called the front-end ratio.

It's a quick test for whether a home is comfortably affordable. If your payment eats much more than a quarter of your pre-tax income, the rest of your budget gets squeezed fast. Use it to set your own ceiling before a lender sets one for you.

There's also a back-end ratio of 36%: your total debt payments (mortgage + car + student loans + credit cards) shouldn't exceed 36% of gross income. Banks will approve you for more — often up to 43%. Being "house poor" is real and miserable.