How Much House Can I Afford on a $100K Salary?

Homeowners in the neighbourhood of their dreams.
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When your salary hits $100,000 a year, psychology might be the biggest threat you face as a homebuyer.

Stores price $100 items at $99.99 because the extra digit makes the leap feel greater than the value of a penny. Similarly, crossing the $100,000 salary threshold could give you reckless confidence in your newfound buying power.

“Jumping from a five-figure to a six-figure salary may seem like a huge leap,” said Ryan Carrigan, CEO of MoveBuddha. “But when purchasing a house, it is important not to make it about what you have. Instead, make it about what you need.”

Even so, a nearly 30% jump above the median national household income will leave you with no shortage of eager real estate agents to choose from. However, income is just one consideration when buying a home on any budget.

Start by Nailing Down Your Maximum Monthly Payment

Instead of focusing on a house’s price, concentrate on identifying the monthly payment you can afford. Everyone’s number will be based on the individual buyer’s unique circumstances, but there are formulas for developing a rough estimate.

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The 28/36 Rule

“There’s a pretty basic rule called 28/36,” said Travis Wells, a real estate investor, broker and owner of Exclusive Housing. “What this means is that only 28% of your gross income — meaning income before taxes — should go toward your mortgage and 36% of your income should go toward your other debts, such as car loans, credit cards, etc.” Here’s how that would look with a $100,000 salary:

  • Maximum Monthly Payment: 28% of $100,000 is $28,000. Divide that by 12 and you get a monthly payment of $2,333.
  • Maximum debt to income: 36% of $100,000 is $36,000, or $3,000 per month allotted for non-housing debt.

“Just remember, these are maximum qualification standards, so it isn’t being suggested to push the upper limit,” said Wells.

The 30% Rule

Many experts say the upper limit is actually two percentage points higher at 30%, which gives you a little more buying power.

“Following the 30% guideline, your monthly housing expenses would be around $2,500,” said Dustin Singer of Dustin Buys Houses. “This assumes a monthly gross income of approximately $8,333 — $100,000 divided by 12. Keep in mind that this amount includes not only the mortgage payment, but also property taxes, insurance, and possibly homeowners association fees.”

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Singer points out that even with this more forgiving calculation, your debt-to-income ratio still cannot surpass 36%.

$100K Salary Gets You Roughly to the Middle of the Pack

So now that you know that you can probably afford something close to $2,500 a month if your finances are healthy, what sale prices should you be looking for when you begin your search?

According to Zillow, the median U.S. home value is $339,084, which should be close to your price range’s sweet spot once you earn a six-figure salary.

“Assuming other factors such as creditworthiness and debt-to-income ratio are favorable, someone with a $100,000 salary could potentially afford a home in the range of $300,000 to $400,000,” said Boyd Rudy, team leader and associate broker with MiReloTeam Keller Williams Realty Living. “However, regional differences in real estate prices will have a significant impact on the actual purchasing power.”

$350K Means Different Things in Different Places

Depending on where you want to live, $350,000 could get you a mini-mansion or it could get you laughed at. To add some perspective, property inspection software firm Inspection Support Network used Redfin data to calculate the median square footage of a hypothetical $350,000 home in cities nationwide.

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According to Motley Fool, the median American home is 2,014 square feet. But you can double or even triple that depending on where you decide to lay down roots — and you don’t have to settle for some backwater to enjoy palatial living space

Here’s a look at the median square footage for a $350,000 home in 30 American cities of all sizes:

Small Cities

  • High Point, North Carolina: 3,125
  • Allentown, Pennsylvania: 3,241
  • McAllen, Texas: 3,365
  • Lansing, Michigan: 3,398
  • Edinburg, Texas: 3,431
  • Waterbury, Connecticut: 3,465
  • Hartford, Connecticut: 3,804
  • Syracuse, New York: 3,889
  • Rockford, Illinois: 4,795
  • Dayton, Ohio: 5,556

Midsize Cities

  • Cincinnati, Ohio: 2,756
  • Huntsville, Alabama: 2,800
  • Greensboro, North Carolina: 2,917
  • Pasadena, Texas: 2,941
  • Winston-Salem, North Carolina: 2,991
  • Little Rock, Arkansas: 3,125
  • Buffalo, New York: 3,125
  • Rochester, New York: 3,465
  • Killeen, Texas: 3,535
  • Akron, Ohio: 4,023

Large Cities

  • Omaha, Nebraska: 2,823
  • Louisville, Kentucky: 2,823
  • Oklahoma City: 2,846
  • Milwaukee, Wisconsin: 3,125
  • El Paso, Texas: 3,182
  • Memphis, Tennessee: 3,302
  • Indianapolis, Indiana: 3,333
  • Tulsa, Oklahoma: 3,365
  • Cleveland, Ohio: 4,930
  • Detroit, Michigan: 6,604

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