Can I Afford a House on a $120K Salary?
On a $120,000 salary, you can afford a home in the $360,000 to $515,000 range with a max housing payment of about $2,800/month. Here's where the line is between smart buy and overstretch.
The Quick Answer
On a $120,000 salary, you can likely afford a home in the $425,000 to $525,000 range. You're well-positioned for conventional loans with favorable terms.
Your Numbers at a Glance
| Metric | Amount |
|---|---|
| Gross Annual Income | $120,000 |
| Gross Monthly Income | $10,000 |
| Max Housing Payment (28% DTI) | $2,800/mo |
| Max Home Price (28% front-end DTI) | $450,000 |
| Max Home Price (36% back-end DTI) | $525,000 |
| Down Payment at 5% | $22,500 |
| Down Payment at 10% | $45,000 |
| Down Payment at 20% | $90,000 |
The DTI Sweet Spot
At $120K, your 28% housing budget is $2,800 per month. Most lenders will approve you for significantly more than this — potentially up to 43-45% DTI for qualified borrowers. But approval and affordability are different things.
A good rule of thumb: if your total housing cost (PITI + HOA + PMI) is under 25% of gross income, you'll barely feel it. At 28-32%, it's manageable. Above 35%, you'll feel the squeeze.
Jumbo Loan Territory
Depending on your location, homes above $472,030 (the 2024 conforming loan limit in most areas) may require a jumbo loan. Jumbo loans typically need:
- Higher credit score: 700+ (often 720+)
- Larger down payment: 10-20% minimum
- More reserves: 6-12 months of payments in savings
- Lower DTI: Usually under 43%
In high-cost areas (parts of CA, NY, HI, etc.), conforming limits are higher — up to $1,089,300 — so you may not need a jumbo loan at all.
The Bottom Line
$120K is a strong household income for homeownership. Focus on keeping your housing costs reasonable relative to your income, maintain healthy reserves, and don't let lifestyle inflation push you into an uncomfortable mortgage.
Run the Numbers
Try these calculators to apply what you learned