How Much House Can I Afford on a $100k Salary?

The short answer

On a $100,000 salary with no other debt and 10% down, most lenders will approve you for a home around $350,000 to $375,000. The amount you can afford without straining is closer to $280,000 to $310,000.

Both numbers are correct. They answer different questions, and the gap between them is where most house-poor households are made.

What the lender is calculating

Underwriting runs on two ratios. The front-end ratio caps housing costs at 28% of gross monthly income. The back-end ratio caps all monthly debt payments, including housing, at 36% — though most lenders stretch this to 43%.

On $100,000 a year, gross monthly income is $8,333. The 28% rule gives you $2,333 a month for housing. At 6.65% with 10% down and a 1.1% property tax rate, that supports roughly $365,000.

Note what that figure includes: principal, interest, property tax, homeowners insurance and PMI. It does not include maintenance, which runs around 1% of home value annually — about $3,650 a year on that house, or another $304 a month that no lender counts.

What the ratios leave out

Lender ratios use gross income, before tax. On $100,000, take-home pay is closer to $6,300 a month depending on your state and retirement contributions. That $2,333 payment is 28% of gross but 37% of the money that actually arrives in your account.

The ratios also ignore, entirely:

• Childcare, which in many metros exceeds a mortgage payment
• Retirement contributions, treated as optional rather than essential
• Commuting costs, which often rise when people buy further out to afford more house
• Maintenance, at roughly 1% of home value a year and higher on older properties

None of these appear in an approval. All of them appear in your life.

A worked example

Take a $365,000 home with 10% down at 6.65%:

• Principal and interest: $2,109
• Property tax at 1.1%: $335
• Homeowners insurance: $158
• PMI at 0.55% of the loan: $151
• Maintenance at 1% annually: $304

Total: $3,057 a month — against $6,300 of take-home pay. That leaves $3,243 for food, transport, insurance, childcare, retirement saving and everything else. It's doable. It is not comfortable, and it collapses if one income drops.

Now the same purchase at $300,000: the all-in cost falls to roughly $2,520, leaving $3,780. That extra $537 a month is the difference between contributing to retirement and not.

The 22% rule of thumb

Holding housing to roughly 22% of gross income rather than 28% preserves the margin that makes ownership comfortable. On $100,000 that's $1,833 a month, supporting a home around $285,000 to $305,000.

That isn't a rule you'll find in underwriting guidelines. It's what's left after you account for the costs the guidelines ignore.

Three ways to raise your ceiling

They are not equally effective:

1. Eliminate monthly debt. Every $100 of monthly payment removed adds roughly $15,000 to your borrowing capacity, because it frees back-end ratio directly. Paying off a car loan before applying is often worth more than saving the same amount for a down payment.
2. Raise your credit score. The pricing gap between a 680 and a 760 score is commonly 0.4 to 0.6 percentage points — well over $100 a month on a $330,000 loan.
3. Increase the down payment. It helps, but a dollar of down payment buys about a dollar of house. The first two lever much harder.

What to do next

Run your actual numbers rather than a rule of thumb. Property tax rates vary by more than sevenfold across US states, and that alone moves your affordable price by tens of thousands of dollars.