If You Earn a $120K Salary or Less, How Much Should You Invest In Housing Costs?
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Laura Beck
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Looking to figure out your housing budget? Financial experts break down exactly how much you can afford, whether you’re making $30,000 or $120,000. Here’s what the numbers say about keeping a roof over your head without going broke.
The 30% Sweet Spot
Financial planners have long suggested keeping housing costs at 30% of your gross income. At $120,000, that means capping your monthly housing at $3,000.
For someone making $80,000? Try to keep it to $2,000.
The Reality Check
Especially in cities, that 30% target might be tough to hit. You might need some flexibility in your budget to account for higher costs, Melissa Caro, certified financial planner and founder of My Retirement Network, told CNBC Make It.
In places like New York, San Francisco or Boston, those numbers might feel like a fantasy. Almost half of all renters now spend more than 30% of their income on housing, according to the U.S. Census Bureau. When a basic one-bedroom can run $3,000 or more in major cities, even six-figure earners find themselves stretching past that 30% mark. In fact, 35% to 39% might be a more realistic percentage for some families.
However, if you can, experts suggest trying to back to 30% when it’s feasible.
Your Maximum Monthly Housing Budget at 30%
- $120,000 salary: $3,000
- $100,000 salary: $2,500
- $80,000 salary: $2,000
- $60,000 salary: $1,500
- $40,000 salary: $1,000
- $30,000 salary: $750
The Danger Zone
Whatever you do, Caro warned against spending 50% or more on housing. “Rent or mortgage payments won’t adjust if you face a job loss,” she said, “so carefully weigh what’s essential versus what’s ideal.”
Remember, these numbers include all housing costs — not just rent or mortgage, but utilities and other housing-related expenses, too.
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