How Much House Can I Afford in Portland? The 28/36 Rule

There are two answers to this question and they are rarely the same number. The first is what a lender will approve you for. The second is what you can spend without your life getting smaller. My job is to make sure you know both before you fall in love with a floor plan.

The rule of thumb, and what it is really saying

The 28/36 rule is the old underwriting shorthand:

• 28% of gross monthly income toward housing. Principal, interest, taxes, insurance, mortgage insurance and HOA dues, all of it.
• 36% of gross monthly income toward all debt combined. Housing plus car payments, student loans, credit card minimums and everything else.

Notice the word gross. The rule is built on income before taxes and before your retirement contribution and your health premium come out. That is why 28% of gross can feel like a much larger share of what actually lands in your account.

Worked through, on $110,000 a year

That is $9,167 a month gross. The 28% housing ceiling is about $2,567. The 36% total debt ceiling is about $3,300.

Now suppose you have a $520 car payment and $180 in student loans. That is $700 of non-housing debt, so the total debt test leaves you $2,600 for housing. Both tests land in roughly the same place, and $2,550 or so is your working number.

The important part is what that has to cover. Property tax and insurance in this metro often run four to six hundred dollars a month on their own, and HOA dues in a new community add more. So the principal and interest portion is not $2,550, it is more like $1,900 to $2,050. That is the number that determines your price range, and it is meaningfully lower than the headline.

Lenders will go further than 36%

Modern automated underwriting routinely approves debt-to-income ratios well above 36%, sometimes into the mid-forties or higher with compensating factors like reserves, a strong credit score or a large down payment.

An approval at 45% is not a lender being generous. It is a lender concluding you will probably keep paying. Probably is doing a lot of work in that sentence. It does not account for your childcare costs, your commute, whether you want to keep travelling, or how you would handle four months without income.

The gap between what you are approved for and what you should spend is where most housing regret lives.

What the rule leaves out

• Maintenance. On a resale home, real money every year. On a new build the early years are near zero, which genuinely improves the picture. Compared in this post.
• The year-two escrow jump on a new build. Your first tax bill may be assessed on land rather than a finished house, and the payment corrects upward when the assessor catches up. Budget to the corrected number, not the first-year number. I explained the mechanism in the escrow post.
• Utilities. Bigger house, bigger bills. New construction usually costs less to heat than a 1970s house of the same size, which offsets some of it.
• Commute. A cheaper house forty minutes further out can cost more once you price fuel, wear and time.
• Childcare, which in this metro can rival a mortgage payment on its own.

The Portland metro numbers

The metro median sale price is running around $554,000, with Multnomah near $538,000, Washington County near $565,500 and Clackamas near $650,000. Median days to pending is 42 and supply is around three months, which is a balanced market where you have room to be deliberate.

If your working housing budget is $2,550, that is not a $554,000 house at current rates unless you are bringing a substantial down payment. Which is exactly why the price points I work in matter to this conversation. New construction in Woodburn starts in the $370,000s and Battle Ground in the $410,000s. Those are real homes in real communities at numbers a 28% ceiling can actually reach.

Current metro figures are on the market data page and refresh weekly.

Three levers that move the number more than saving does

Your credit score

The most underrated lever by a wide margin. Score affects your interest rate and, if you are under 20% down, your mortgage insurance premium separately. Moving up a tier can change your affordable price by tens of thousands. Ninety days of deliberate work often beats a year of extra saving. Start with the credit score tool.

The car payment

Every $500 of monthly debt takes roughly $500 out of your housing budget, which at current rates is somewhere around $70,000 to $80,000 of purchasing power. Paying off or not taking on a car loan before you buy is the fastest way to move your ceiling.

Builder incentives

A permanent rate buydown lowers the payment for the life of the loan, which changes what a given monthly budget can buy. It does not help you qualify with a temporary buydown, but a permanent one does. Worth understanding before you shop, and I laid it out in the incentives post.

The test I actually use

Forget the ratios for a moment. Take the full projected payment, including taxes, insurance and HOA. Subtract your current rent. Put that difference into savings every month for three months.

If you barely notice it, you can afford the house. If it hurts, you have your answer before you have signed anything, and it cost you nothing but three months and a bit of savings you get to keep.

Then get a real pre-approval rather than a pre-qualification, so you know the actual rate and the actual mortgage insurance figure for your file. The affordability calculator is a reasonable first pass.

When you want the version with real numbers, including what taxes and dues run in specific communities, let me know. And if the honest answer is that the number is not there yet, I will tell you what to fix and roughly how long it takes.