Percentage rules for home buying?

The percentage rules for buying a home are guidelines to help you determine how much house you can afford. One common guideline is the 28/36 rule, which suggests keeping your monthly housing payment, including your mortgage, property taxes, insurance, and HOA fees, at or below 28% of your gross monthly income, while keeping all monthly debt payments combined around 36% or less. Another common rule is putting 20% down, but you don't necessarily need that much since some loans allow down payments as low as 3% to 3.5%, although you may have mortgage insurance. You should also budget for closing costs, moving expenses, future repairs, and emergency savings. Since you're hoping to buy this spring, start by reviewing your income, monthly debts, credit score, and savings, then speak with a lender to explore your loan options and get preapproved. Most importantly, just because a lender approves you for a certain amount doesn't mean you need to spend that much; aim for a monthly payment that comfortably fits your budget and lifestyle.

Veronica, there are several of them and they do different jobs, so here they are sorted by how much they actually matter. The one that decides your approval: 28/36. The 28 is your front-end ratio. Your total monthly housing payment should stay at or under 28 percent of your gross monthly income. Housing payment means principal, interest, property taxes, homeowners insurance, and any HOA dues. Not just the loan payment. That distinction is where most first-time buyers get surprised, because they budget around the mortgage and then discover taxes and insurance added four hundred dollars. The 36 is your back-end ratio. All of your monthly debt payments, housing plus car plus student loans plus credit card minimums, at or under 36 percent of gross income. Both use minimum required payments, not balances. That is worth sitting with, because it changes what to pay off before you buy. A $20,000 car loan at $460 a month damages your approval far more than $20,000 on a card at a $200 minimum, even though the card is worse debt in every other respect. If you are close to the line, pay off the small high-payment loans first, not the biggest balance. The threshold you will hear quoted: 43 percent. That number gets cited constantly as a maximum debt-to-income. In practice it is a commonly referenced line rather than a hard wall, and automated underwriting approves above it regularly when there are compensating factors like strong reserves or a high credit score. Do not treat 43 as a ceiling and do not treat it as a target. The one that is mostly a myth: 20 percent down. You do not need it for most programs. Conventional loans go as low as 3 percent down for eligible borrowers, FHA at 3.5 percent, and VA and USDA at zero for those who qualify. What 20 percent buys you is avoiding private mortgage insurance on a conventional loan, plus a smaller payment. PMI is removable later as you build equity, so putting 5 percent down is not a permanent condition. Waiting five years to save 20 percent while prices and rates move is not obviously the better trade. The one nobody tells you and everyone needs: budget roughly 1 percent of the home's value per year for maintenance. On a $350,000 house that is about $3,500 a year, or roughly $290 a month, set aside. It is a rule of thumb rather than a measured number, and some years it is zero and some years it is a water heater and a roof at once. Renters do not have this line item and it is the single most common thing that makes new homeowners feel house-poor when their payment was actually fine. And a budgeting frame worth borrowing: 50/30/20, meaning roughly half your take-home to needs, thirty percent to wants, twenty percent to savings and debt payoff. Not a lending rule, but a useful sanity check. If buying at your maximum approval means your savings rate goes to zero, the lender said yes to a payment your life says no to. That is the real distinction to hold onto. Lenders tell you the maximum. These ratios tell you what is comfortable. Those are almost never the same number, and the gap between them is where people get into trouble. Decide your own number before you get pre-approved, so the approval amount does not become the target. For context in 2026: Freddie Mac had the 30 year fixed averaging 6.66 percent for the week ending July 30, 2026. Whatever you model, model the full payment including taxes, insurance and HOA. One local note. Ask a New Mexico loan officer about MFA, the state housing finance authority, and which down payment assistance programs you would qualify for. Those change often enough that you want a current answer from someone licensed there. I am a real estate professional, not a lender or a financial planner, so run your actual numbers with licensed people. My name is Zoltan Peresztegi and I work in Los Angeles, the South Bay and on the Palos Verdes Peninsula, so I am not your Albuquerque agent. If you want an introduction to a first-time buyer specialist there when you are ready in the spring, message me and I will make one. Zoltan

The 28/36 rule mentioned is the most common. Keith Jean-Pierre Managing Principal The Dapper Agents Real Estate Operations in ALL 50 States

Follow the 28/36 Rule. 28%: Your total monthly housing payment (Principal, Interest, Taxes, Insurance) should not exceed 28% of your gross (pre-tax) monthly income. 36%: Your total debt—housing plus car loans, student loans, and credit cards—should not exceed 36% of your gross income. Extra Tip: In 2026, lenders are more flexible (sometimes up to 45%), but sticking to 28/36 ensures you aren't "house poor."

I would recommend speaking to a local lender that can walk your through all the best options. Do not recommend online lenders as they are most likely not looking at your specific market and the details of your personal needs. When talking with a local lender to get a pre-approval, they may be able to point you in the direction of local programs that are available to help with 1st time home buyers or grants that might help to get your real estate goals met for your circumstances. There might be options for a 100% USDA loan. But a local lender can answer all these questions for you specific to your situation.

Your best bet is to get pre-approved with a Lender. They will take the necessary steps to check your credit, income and expenses and let you know what you qualify for and if you need to work on your DTI Ratio (Debt to Income.) Different loan programs have different rules and your lender is your best resource!