Home › Home & property › Home affordability › $120K salary
Home affordability · $120K salary
How much house can I afford on a $120K salary?
On a $120K salary ($120,000 a year), with $500 a month in other debts and 10% down, you can comfortably afford a home of about $351,000. That follows the 28/36 rule at about 7.35% for a 30-year mortgage (October 2026 average). Lenders often approve more: up to about $476,000 at 43% debt-to-income.
The answer
Monthly cost
What a $351,000 home costs each month
| Cost | Per month |
|---|---|
| Principal and interest | $2,176 |
| Property tax (1%) | $293 |
| Home insurance | $146 |
| Mortgage insurance (PMI) | $184 |
| Housing payment lenders count | $2,799 |
| Upkeep reserve (1% a year) | $293 |
| Real monthly cost | $3,091 |
That is 31% of gross income once upkeep is counted. You would need about $45,700 at closing: $35,170 down plus $10,530 in closing costs. At this income the 28% limit on housing alone is what caps the price; your other debts are not the constraint.
Other debts
How car loans and student loans change it
Under the 28/36 rule, debts up to about $800 a month (8% of income) don't lower the comfortable price, because the 28% housing limit applies first. Above that, and at every level under the 43% stretch, each dollar of debt payments reduces the house.
| Other debts per month | Comfortable (36%) | Stretch (43%) |
|---|---|---|
| $0 | $351,000 | $539,000 |
| $250 | $351,000 | $507,000 |
| $500 | $351,000 | $476,000 |
| $1,000 | $326,000 | $413,000 |
| $1,500 | $263,000 | $351,000 |
Mortgage rates
How the rate changes it
A one-point drop in rates buys noticeably more house on the same income.
| 30-year rate | Comfortable price | Principal and interest |
|---|---|---|
| 6.35% | $379,000 | $2,122 |
| 6.85% | $365,000 | $2,152 |
| 7.35% (today) | $351,000 | $2,176 |
| 7.85% | $338,000 | $2,200 |
| 8.35% | $325,000 | $2,218 |
Down payment
How your down payment changes it
Under 20% down you pay mortgage insurance (PMI) until you owe 80% of the price.
| Down payment | Comfortable price | PMI | Cash needed at closing |
|---|---|---|---|
| 3% down | $329,000 | $186/mo | $19,800 |
| 5% down | $335,000 | $186/mo | $26,800 |
| 10% down | $351,000 | $184/mo | $45,700 |
| 20% down | $414,000 | None | $95,300 |
Questions
Common questions
What mortgage payment can I afford on a $120K salary?
Under the 28/36 rule, up to about $2,800 a month for the mortgage, property tax, insurance and PMI, with $500 in other debts. Lenders that allow 43% debt-to-income would count up to $3,800.
Is $120K enough to buy a house?
At about 7.35% rates and 10% down, $120K comfortably supports a home around $351,000, needing about $45,700 saved for the down payment and closing. Whether that buys a house depends on local prices.
Assumptions
How we worked it out
- Gross household income $120,000 a year ($10,000 a month).
- $500 a month in other debt payments, such as a car or student loan.
- 10% down, 3% closing costs, good credit (700-759), 30-year fixed at 7.35%.
- Property tax 1% of the price a year, home insurance about 0.5%, PMI under 20% down, no HOA.
- Upkeep reserve 1% of the price a year, for a home 10 to 30 years old.
- Comfortable is the 28/36 rule: housing under 28% of gross income and all debts under 36%.
Change any of these in the home affordability calculator.
More salaries
Other incomes
$40K$50K$60K$70K$75K$80K$90K$100K$110K$120K$125K$130K$140K$150K$175K$200K$250K$300K
Buying a car too? How much car you can afford on $120K.