How Much House Can I Afford
on a $120,000 Salary?
On a $120,000 salary, the 28/36 rule limits your housing payment to $2,800/month. With 10% down at a 7% rate, that buys a home up to $343,000. Adjust for your down payment and existing debts below.
28/36 rule — $120,000 income
Maximum home price by rate and down payment
6.5% mortgage rate — 30-year fixed
| Down payment | Amount | Max home price | Monthly PITI |
|---|---|---|---|
| 3.5% down (FHA minimum) | $4,200 | $350,000 | $2,796/mo |
| 5% down | $6,000 | $352,000 | $2,800/mo |
| 10% down | $12,000 | $357,000 | $2,800/mo |
| 20% down (no PMI) | $24,000 | $367,000 | $2,800/mo |
7% mortgage rate — 30-year fixed
| Down payment | Amount | Max home price | Monthly PITI |
|---|---|---|---|
| 3.5% down (FHA minimum) | $4,200 | $337,000 | $2,802/mo |
| 5% down | $6,000 | $338,000 | $2,798/mo |
| 10% down | $12,000 | $343,000 | $2,797/mo |
| 20% down (no PMI) | $24,000 | $353,000 | $2,797/mo |
7.5% mortgage rate — 30-year fixed
| Down payment | Amount | Max home price | Monthly PITI |
|---|---|---|---|
| 3.5% down (FHA minimum) | $4,200 | $324,000 | $2,801/mo |
| 5% down | $6,000 | $325,000 | $2,797/mo |
| 10% down | $12,000 | $330,000 | $2,796/mo |
| 20% down (no PMI) | $24,000 | $341,000 | $2,803/mo |
Assumes no existing monthly debts and 30-year fixed mortgage. Property tax estimated at 1.1% annually. Homeowner insurance at 0.5%. PMI at 0.5% of loan for down payments below 20%.
PMI math on a $120,000 salary
Putting down less than 20% on a $120,000 income triggers PMI at roughly 0.5% of the loan per year. On a $343,000 home, that is $1,655/year in extra cost until you reach 20% equity. Saving to the 20% threshold eliminates this entirely and reduces monthly payment by $138/month.
Run your exact numbers
Do not include rent — only recurring debt obligations.
Less than 20% of the home price triggers PMI (private mortgage insurance).
Buying and selling within 5 years rarely covers transaction costs.
Frequently asked questions
How much house can I afford on a $120,000 salary?
On a $120,000 salary with 10% down and a 7% mortgage rate, you can afford a home up to $343,000. Using the conservative 20% down at 6.5%, that rises to $367,000. These figures assume no existing monthly debts. The 28/36 DTI rule limits your housing payment to $2,800/month.
What is the 28/36 rule for a $120,000 income?
The 28/36 rule says your housing costs should not exceed 28% of gross monthly income and total debts should not exceed 36%. On a $120,000 salary, that means maximum housing costs of $2,800/month and maximum total debt payments of $3,600/month. Most conventional lenders use these thresholds.
How much should I put down on a $120k salary?
With a $120,000 income, a 10% down payment is $12,000 and a 20% down payment is $24,000. The 20% threshold eliminates PMI (typically 0.5% of the loan annually), which saves $1,655/year at this income level. FHA loans allow 3.5% down but require mortgage insurance for the life of the loan.
Can I afford a house on $120k with existing debt?
Existing debts reduce your maximum home price directly. The 36% back-end DTI limit means all monthly debts — car payment, student loans, credit cards, and your new mortgage — cannot exceed $3,600/month combined. Each $500/month in existing debts reduces your maximum home price by roughly $70,000-$90,000 at current rates. Use the calculator above to model your exact situation.