How Much House Can You Afford on a $100,000 Salary?

On a $100,000 salary, most lenders will approve you for a home somewhere around $360,000, assuming a 20% down payment and no other debts. That figure moves a long way once your circumstances change, and the number a lender approves is not the number you should spend.

Here is how the calculation actually works, and where it misleads.

The 28/36 rule, which is what lenders really use

Lenders do not look at your salary and pick a house price. They apply two ratios to your gross monthly income and take whichever gives the smaller answer.

$100,000 a year is $8,333 a month before tax.

• Front-end ratio (28%). Your total housing payment - principal, interest, property tax, insurance and any HOA dues - should stay under 28% of gross monthly income. That is $2,333.
• Back-end ratio (36%). That same housing payment plus every other monthly debt payment should stay under 36%. That is $3,000, minus whatever you already owe each month.

With no other debts, the 28% housing limit binds and your budget is $2,333 a month.

Now work backwards. Subtract roughly $125 for homeowners insurance and, at a 1.1% property tax rate, around $330 in tax. That leaves about $1,878 for principal and interest. At 6.5% over 30 years, that payment supports a loan of roughly $297,000 - so about $371,000 of house with 20% down.

You can run your own figures in the home affordability calculator, which shows you which of the two ratios is actually limiting you.

Existing debt costs you more than you expect

This is the part people underestimate. Every dollar of monthly debt payment comes straight off your back-end limit.

Monthly debt	Housing budget	Approx. home price
$0	$2,333	~$371,000
$400 car payment	$2,333	~$371,000
$700 car + student loan	$2,300	~$366,000
$1,200 in total debts	$1,800	~$285,000

Notice the first two rows are identical. Below roughly $667 a month of other debt, the 28% housing ratio is still the binding constraint, so paying off a small car loan does nothing for your budget. Above that, the back-end ratio takes over and every $100 you clear buys you roughly $20,000 more house.

That is worth knowing before you decide whether to pay down a loan or keep the cash for your down payment.

Where the ratios quietly mislead

They use gross income, but you spend net. On $100,000 with no state income tax, take-home is roughly $6,400 a month, not $8,333. A $2,333 payment is 28% of gross but 36% of what actually lands in your account. Add utilities, which run higher in a house than an apartment, and you can be at 45% of real income while still being "within guidelines". The paycheck calculator shows what your salary actually deposits.

Closing costs are separate. Budget 2-5% of the purchase price - $7,400 to $18,500 on a $371,000 home - on top of the down payment.

Maintenance is real and recurring. The standard reserve is about 1% of home value a year, so roughly $3,700, or $310 a month. That is not in any lender ratio.

What most buyers should actually use

A more conservative rule is 25% of take-home pay. On $100,000 that is about $1,600 a month, supporting a home around $255,000.

That will feel painfully low if you have been quoted $371,000. The honest framing is that the two numbers answer different questions. The lender's number is the most they believe you can repay without defaulting. The conservative number is what leaves room for a job change, a rate reset on your next move, a new roof, and actually saving money.

Somewhere between the two is where most people land - but it is worth choosing that point deliberately rather than letting a pre-approval letter choose it for you.

What moves the number most

• Your rate. At 5.5% instead of 6.5%, that same $1,878 payment supports about $330,000 rather than $297,000 - roughly $33,000 more house for a one-point difference.
• Your down payment. Below 20% you pay PMI, which eats into the same monthly budget. On a $300,000 loan, PMI at 0.5% adds about $125 a month, costing you roughly $20,000 of buying power.
• Property tax rate. 1.1% is a middling figure. In parts of New Jersey or Texas it is more than double that, which can reduce your affordable price by $40,000 or more on the same income.

Run your own combination in the mortgage calculator to see what each change is worth.

These figures are estimates for general information and are not financial advice. Your actual rate, taxes, insurance and approval depend on your credit profile and lender - confirm with a licensed professional.