How Much House Can You Afford On A 100k Salary?

Ah, the coveted $100,000/yr income.

A six-figure salary is often claimed to be the pinnacle income goal for most.

So, how much how exactly can you afford when making $100,000 per year?

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As with most things in the real estate world, it depends. But, let’s break it down with some examples…

First, we need to start with the monthly payment. The monthly payment is a huge factor in considering how much you can afford, no matter you income level.

This is because your monthly payment and your debt-to-income ratio (DTI) go hand0-in-hand with lenders making sure you have the ability to repay your mortgage.

A good rule of thumb is having a max DTI of 43%. Your max DTI might be higher or lower depending on the lender and type of loan program, but 43% is going to be a solid middle ground for us to consider.

Let’s also put a cap on the housing payment of 28% on the mortgage payment.

So, here’s how we calculate this:

Step 1: Find gross income. Everything is going to be based off of gross income. That is income before taxes. So, in this scenario that is $8,333.

Step 2: Find your max DTI. Our max DTI is $3,583. That means our monthly mortgage payment + monthly minimum debt payments cannot exceed this amount.

Step 3: Figure out monthly debt payments. Find the total off all your monthly minimum debt payments (e.g. auto loans, credit cards, student loans, installment loans, lines of credit, etc.). Let’s say you have a $400/mo auto loan and a $250/mo credit card for a total of $650/mo.

Step 4: Subtract your monthly minimum debt payments from your max DTI. ($3,583 - $650 = $2,933.) This is the max housing payment you can have!

Now that we have our max housing payment, what’s included in that?

A housing payment is your Principal + Interest + Homeowner’s/Flood Insurance + Taxes + Homeowner’s Association Dues.

Now that we know our max housing payment, we need to figure out what kind of down payment we want to put on the house.

Usually, a solid number is 10%. You might qualify to put down less, or you might choose to put down more, but 10% is a solid middle ground. This is where you’ll have to do a bit of guessing to get the math close.

Since you don’t know the max purchase price yet, take an estimate.

The calculator below is a great way to play around with these numbers to figure out how much house you can afford on a $100,000 salary.

All in all, figuring out how much you can afford on a specific income is first going to be about your monthly payment.

This is a great way to also see the max housing payment you’re willing to allow in your budget.

The hardest part to figure out is the home purchase price that correlates to that max monthly payment. And this is because so many factors will change (i.e. your down payment, taxes, insurance, homeowner’s association fees, etc).

So, play around with the numbers to figure out your max purchase price with a set income of $100,000, or the income figure that you make.

Hey, my name is Kyle and I'm a Mortgage Advisor serving Tennessee, Florida, and Ohio. My goal is to help you get a crystal-clear home loan that helps you win the house you love. If you're ready to create your home-buying plan, you can reach me through any of the ways below:

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Kyle Seagraves
NMLS# 1701021
Motto Mortgage Alliance
8900 N. Dixie Dr.
Dayton, OH 45414
Equal Housing Opportunity

[ezmi]

Your voice is so soothing. Thank you for sharing.

[Weathernerd]

I'm a single person who makes 80k a year, has no student loan/credit card debt, has a $250 a month payment on a fuel efficient car and the maximum house payment I can afford is about 2k a month. When I say house payment I mean mortgage + taxes + Insurance + HOA fees. The bank would qualify me for almost 3k a month but 3k seemed alittle high so I created a budget where I added up all my normal expenses. I'm very glad I made this budget because I discovered if I took the maximum amount the bank would lend me I'd have a negative cashflow, have to cut way back on everything/live poverty lifestyle and probably be foreclosed upon when there was a slight slow down in the economy. If I keep my housing payment to 2k I can continue living the middle class lifestyle I'm used to, save for retirement/rainy day and survive a economic downturn.

[StephanieWeeks]

Great video! I love how you use the calculator to show how the different factors change the overall total of the mortgage you can get approved for as well as the monthly payment

[LetterNumbers.]

Property taxes make a difference, too. The difference between $3k and $6k property taxes is $250 towards your housing costs. I am working towards home ownership so I set my home price range AND monthly payment range.

I'm about 18-24 months out from when I can actively start the home search, but I have to keep my eyes on the prize so getting all my finances and goals ready.

[RatchetRalph]

I don't know how i ended up here but. the voice lowers my anxiety and just soothing. I dont know?! I am reading the comments and glad I am not alone. I fell asleep to his voice *SUBSCRIBED*

[andrewfelton]

Dude you should do an entire video in ASMR 😭 ur voice just made me sleepy as hell in a good way! 👌🏽 great video 🔥

[asusonly]

A L7 SF engineer here...thanks for the vid.... really clear instructions

[mikejames]

His voice puts my brain in theta state! Soooo soothing!

[SilviaManentFinancialAdvisor]

I love the smart asset calculator! I always used it for approximating taxes! I really enjoyed the video! Also you look Swiss!

[FabianLopez-rdrg]

I make $150, 000 a year as an oil refinery operator. I’m 25 years old. I will be looking to buy a home next year! Thanks for the advice!

[ransomemckissick]

Excellent vid! Here in San Jose, CA, that would be a 2-bedroom condo! I will be using my VA loan to purchase one in this price range next year

[yoyryrh]

This is so sad considering the housing market. Even earning 6 figures, a person cannot reasonably afford a home in a city. Imagine how it is for the average american definitely earning under 70k.

[kathleenvelasco]

Your videos are awesome!! Thanks for all the information. Do you have a video discussing down payment assistance?

[lIlIllll]

I just got a pay raise close to 6 figures and I am now starting to find out how much house I can afford. Thank you!

[ndawon]

“As my therapist likes to call it” hahaha, love that. Also this totally feels like asmr to me haha

[RealRyanDeLuca]

It’s a good breakdown but if someone with 100k a year spent $3k/month on a mortgage they would feel VERY house poor, and would likely not be able to save a dime for retirement. Spending more than 25% of your NET income on a mortgage will likely make you feel house poor if you plan to save 15% of your gross income for retirement.

[YRDX]

100k a year, is actually extremely hard to get. The average salary for the most common jobs in most areas give less than 40k on average a year. (without tax)

[blurofserenityblue]

Your videos are so helpful and done well. 👏 why are you not licensed in California?

[tedd]

How do lenders view unused credit?
ie. I have zero debt, 800+ credit score and $50k in unused available credit card credit limit.

[theDanDeleon]

I haven’t even watched the video yet but I live in California so I’m just gonna cry myself to sleep right now. Lmaoo