How much house can I afford on a $120,000 salary?

About $196,000 to $246,500 for a household filing jointly, $214,500 typical. A bank calculator says $387,500. At this income the interesting question is not the number — it is how much the number moves when you move.

The starting numbers

Take-home on $120,000 filing jointly runs $6,897 to $7,710 a month. As a single filer on the same salary it is $6,303 to $7,162 — the higher brackets bite sooner. Capping all-in housing at 25% of net gives $1,724 to $1,928 a month.

The relocation math nobody runs properly

$120,000 is squarely in the range where people consider moving for cost of living, and the usual analysis stops at income tax. That is half the calculation, and frequently the less important half.

Look at the table above. The spread between the top and bottom rows is $50,500 on identical household income. That is not driven by salary at all — it is property tax and insurance, paid monthly through escrow, competing directly with your mortgage payment.

So when you evaluate an offer in another state, compare four things, not one: the salary, the state income tax, the effective property tax rate on the house you would actually buy, and the insurance premium in that market. A 10% raise into a state with double the property tax and triple the insurance can leave you able to afford less house than before.

Two more items belong in the same calculation and rarely make it: local sales tax, and whether the destination has county or municipal income tax on top of the state rate. Ohio municipalities, Maryland counties and Indiana counties all levy their own, and the calculator on this site accounts for them.

What the bank says, and what it costs

$387,500, from 28% of gross with national-average escrow. The real all-in cost at that price is about $3,325 a month — 45% of take-home. At $120,000 that feels survivable on a spreadsheet, which is exactly what makes it dangerous: you can service it right up until you cannot.

Debt has room, then it does not

The 25% housing cap binds until roughly $811 a month of other debt, so a normal car payment costs you nothing in buying power. From $214,500 with no debts you stay at $214,500 through $600 a month of payments, then fall to $214,500 at $800 and $192,500 at $1,000.

Rate and down payment

$29,500 separates 5.75% from 7.75% at this loan size.

Twenty percent down reaches $242,500 and needs $48,500 in cash. At this income that is a realistic two-to-three-year goal rather than a fantasy, so the PMI-versus-wait question is genuinely open. Model both rather than following a rule.

Stress-test it on one income

If this $120,000 is two salaries, the mortgage assumes both continue for thirty years. Run the calculator a second time on the larger salary alone and compare it to the house you are considering. As a single filer, $120,000 supports roughly $197,000 — and if only one of you earns, say, $70,000, the single-income figure is far below that.

The gap between those two numbers is the risk you are carrying. It does not mean do not buy; it means hold enough cash to cover the difference for six months. At $1,840 a month, six months is roughly $11,040. That reserve is what converts a layoff from a catastrophe into an inconvenience.

The advice that actually applies at $120,000

You have enough income that lenders will happily approve something uncomfortable, and enough margin that the discomfort will not show up for a year or two. Buy at 75–80% of the maximum, keep six months of the full payment in cash, and treat any figure a lender quotes as the ceiling of what is legal rather than a recommendation.

Run your own numbers →