How Much House Can I Afford on $120K a Year?

On $120,000 per year you can comfortably afford a home between $350,000 and $500,000, depending on your down payment, interest rate, and existing debt. Your gross monthly income is $10,000. The 28% rule sets your maximum housing payment at $2,800. At 6.75% with 20% down, that supports approximately $410,000. With minimal debt and excellent credit, you can stretch toward $500,000 while staying under the 36% total DTI limit.

Here is the math at three price points with 20% down at 6.75%. At $380,000: loan $304,000, P&I $1,972, total housing $2,463 (24.6% of income — very comfortable). At $430,000: loan $344,000, P&I $2,232, total $2,792 (27.9% — right at the limit). At $500,000: loan $400,000, P&I $2,595, total $3,178 (31.8% — stretching beyond recommended).

Existing debt compresses your range significantly. A $500 car payment plus $300 in student loans means $800 per month is already committed to debt. Your back-end DTI limit of $3,600 ($10,000 times 36%) minus $800 leaves $2,800 for housing — still adequate for $410,000. But if total debt is $1,200 per month, available housing drops to $2,400, reducing your range to roughly $340,000 to $360,000.

For dual-income households where $120K is combined, the math works identically. What matters is total household gross income, not how it is split between earners. However, dual income provides more stability (two job losses are less likely than one), which can justify slightly higher DTI ratios. For more on affordability at different income levels, see our guides on homes at [$100K](/blog/how-much-house-afford-100k-salary) and [$60K](/blog/how-much-house-afford-60k-salary). Use the [mortgage calculator](/calculators/mortgage) for your exact numbers and the [affordability calculator](/calculators/can-i-afford) for a verdict.

Frequently Asked Questions:

Can I afford a $600K house on $120K? Only with 25%+ down, no other debt, and excellent credit. At standard terms it pushes housing costs to 35%+ of income.

What monthly payment can I handle on $120K? Maximum $2,800 for total housing cost. Comfortable target: $2,200 to $2,500.