House Affordability on a $100K Salary: How Much Can You Really Buy?

Picture this: you’re sitting at your favorite coffee spot scrolling through fresh listings, jaw-dropping at prices and photos, but you keep circling back to one burning question—can I really afford this if I make $100,000 a year? It’s not as simple as plugging a number into a calculator and expecting magic. Suddenly you’re hit with talk of debt ratios, down payments, credit scores, and all the mystery fees that banks rarely shout about. The truth is, being smart with this decision means looking past the price tag and digging into what you can actually swing each month without ending up on a ramen diet.

Decoding Home Affordability on a $100K Salary

Let’s skip the guesswork and get into the real math. Earning $100,000 puts you slightly above the median household income in the U.S., but that doesn’t mean you can stretch for any home you want. Banks use the all-important debt-to-income ratio—call it DTI for short. Most lenders prefer a DTI under 36%, meaning your total monthly debts, including your future mortgage, shouldn’t gobble up more than that share of your monthly gross income. If you make $100,000, that’s about $8,333 per month before taxes. Now, 36% of that is $3,000, which means that, idealy, your combined monthly debt payments (car, student loans, credit cards, and that mortgage) shouldn’t cross above $3,000.

You might’ve heard about the 28/36 rule. The “28” is the front-end ratio—meaning your monthly mortgage payment should stay under 28% of your gross monthly income. For you, that’s around $2,333 a month. But remember, that’s just the mortgage: property taxes, insurance, and any HOA fees need to fit inside that number. Before you even get into specifics, lenders will peek at your credit score. If it’s 740 or higher, good—expect better rates and higher max loan offers. Below 700? The banks may tighten up and give you less to work with unless you pay a higher rate.

For a rough estimate, most folks landing at $100K a year, with solid credit and a modest debt load, can afford a home in the $350,000 to $500,000 range. Where you land in that spread depends heavily on the down payment, loan type, and local housing prices. National averages hide the wild swings between places like Austin (where $500,000 can actually get you a four-bedroom with a yard) versus, say, the Bay Area (where it might be a studio with a view of someone else’s studio). In June 2025, the median U.S. home sale price was about $420,000 according to the National Association of Realtors, so that $100K salary puts you right there under average—if you play your cards right.

Here’s a quick reference chart to give you a sense of what your buying power looks like depending on the down payment you can manage:

Bear in mind, those payments are ballpark figures. Actual costs shift with mortgage interest rates, which as of July 2025 average about 6.3% for a 30-year fixed loan. Just last year, rates danced between 6% and 7%, so even small moves matter a lot. A half-point change on a $400,000 loan can shift your payment by more than $100 a month—something that adds up way faster than you’d think.

Breaking Down the Real Costs of Home Ownership

If you think the math stops at the down payment and loan amount, you’re about to open a whole new can of worms. Your monthly payment isn't just paying off the loan principal and interest. You also need to budget for property taxes (which can be 1–2% of the home's value annually depending on where you live), homeowners insurance (often $1,200–1,800 per year), and—if you put less than 20% down—private mortgage insurance (that’s PMI, running about 0.5–1.5% of your loan each year). If your dream home is in a managed neighborhood, tack on Homeowner Association (HOA) fees, which in some cities can hit $300–$700 per month.

Those are just the regular must-haves. Then come the curveballs. Got your eye on a fixer-upper? Budget for repairs. Moving from a rental apt to a single family home? Hello, lawnmower. Stuff breaks, and it always seems to break at the worst moment. The rule of thumb is to put aside at least 1–2% of the purchase price annually for repairs and maintenance. On a $400,000 home, that’s $4,000–$8,000 a year in cash for water heaters, fresh paint, and the things YouTube videos make look easy but never are.

Property tax jumps often trip up first-timers. For example, Texas property tax rates average about 1.7% of the home value per year, so on a $400,000 house you’re looking at $6,800 just in taxes. In other states, like Hawaii, that same property tax could be just a tick over $1,000. That’s a huge swing, and ignoring it could make things way tighter than you expected.

Let’s talk closing costs. When you actually buy, expect extra costs: lender fees, appraisal, title insurance and legal stuff, inspection fees. In 2025, average total closing costs are around 2–5% of the purchase price. So for a $400,000 house, keep $8,000 to $20,000 handy. Some of it can come from seller credits, but usually you’ll need cash up front.

If you’re stretching toward the max, you’re at risk if surprise expenses pop up. Mortgage lenders often use a 43% DTI as the max, but the sweet spot is closer to 36%. This gives you room if costs rise or life just happens. Playing it safer with your budget keeps stress down once the housewarming buzz wears off.

If you’re worried you don’t have 20% down, it’s not game over. Options like FHA loans let you buy with as little as 3.5% down, though you’ll typically pay for mortgage insurance. VA loans (for veterans) and USDA loans (for rural buyers) can shave that down to zero in some cases. Every program has its own twists: extra fees, property requirements, and some income restrictions. Look into local down payment assistance as well—most states and cities try to help first-time buyers get a leg up with grants or low-interest loans for the up-front costs.

Tuning Your Home Search: Tips, Strategies, and Pitfalls to Dodge

All right, time for the real-world hacks. First thing’s first: get pre-approved. Not just pre-qualified, but pre-approved. It means a lender actually checks your credit, income, and debts and tells you your specific price range and likely monthly payment. It makes your offer stronger when you find the home you love, letting you move quickly and look serious to sellers. Lots of buyers skip this step and end up wasting time.

Second, don’t let yourself get wowed by those high-ceiling, open-plan show homes and stretch for the absolute most a lender will let you borrow. Financial pros (and plenty of folks who bought just before a layoff) will tell you that just because you “can” spend $3,000 per month doesn’t mean you “should.” Factor in your other goals, like travel, family, going back to school, or just being able to relax without a money cloud hanging overhead.

Third, don’t ignore the cost of location. Sure, some folks love the long commute for a bigger home, but gas, tolls, and stress can eat your budget. Property taxes and insurance rates are hyper-local, so don’t just window shop the Zillow price—get details on those extras in every area you’re considering. Each city (and sometimes each block) can have its own quirks.

House prices get all the attention, but keep an eye on interest rates too. Just two years ago, mortgage rates hit their highest mark in decades before falling back slightly in 2025. Right now, hovering around 6–6.5% means rates aren’t as scary as last year’s 7.2% spike, but definitely not the “free money” days of the pandemic. Lock in a rate when you see one that lets your monthly payment feel safe—and ask about points (paying more up front to lower your rate for the whole loan).

Be flexible on your must-haves. Open-minded buyers often find great deals on homes that need just a fresh coat of paint and some new flooring, instead of chasing turnkey places with bidding wars. Look for properties that have been sitting on the market a while—sellers might be ready to cut a deal. And don’t forget: whatever place you buy, you can always upgrade over time, but much harder to fix regret from pushing your budget too far out the gate.

If you’re a first-time buyer, surround yourself with people who know what they’re doing. A savvy real estate agent, a responsive mortgage broker, and an inspector you trust go a long way toward dodging nasty surprises. Ask lots of questions about every line item in your loan estimate and all inspection findings. And never forget to triple-check those HOA rules—got a dream for a backyard fire pit or raising chickens? Make sure it’s allowed before you sign on the dotted line.

Lastly, remember the housing market goes up and down. Don’t fall in love with the first decent place you tour if it doesn’t feel right. Focus on places you can see yourself in for at least five years—selling too soon often means you’ll lose money to transaction fees and won’t build much equity. Take your time, know your real limits, and buy a home that fits your real life, not just your salary on paper.