Using a percentage of your income can help you determine your housing budget. The 28/36 rule can help you decide on a home's price.

According to the rule, your mortgage should not exceed 28 percent of your total monthly gross income or 36 percent of your total debt.

To begin, consider how much money you have coming in — your monthly earnings from your job, investments, and any other sources of income.

Determine your monthly income (and your partner's, if applicable). Include alimony, investment, and rental income.

Begin by crunching the numbers with a calculator.

Estimate your housing costs and down payment. Include property tax, insurance, mortgage rate, and loan terms (or how long you want to pay off your mortgage). 

Count your costs. This is monthly spending. Spending accurately affects how much you can afford to spend on a house.

Most financial advisors agree that people should spend no more than 28% of their gross monthly income on housing and no more than 36% on total debt.

Why is it wise to follow the 28/36% rule?

When considering mortgage payments, it's important to know the difference between what you can spend and what you can spend comfortably.

How much mortgage payment can I afford?

Your housing budget will be affected by your mortgage terms, so it's important to calculate your existing expenses and shop around for the best deal.

How to Calculate Your House Purchase Price

The borrowers who have the best credit scores, the least amount of debt, and the largest down payments typically receive the best interest rates from lenders.

What effect does your credit score have on your affordability?

Your credit score serves as the foundation of your finances and is an important factor in determining your mortgage rate.