Earning $120,000 per year puts you well above the median household income — enough to comfortably afford a median-priced home in most markets.
Have a specific home in mind? See Income Needed for a $500K House
Quick Answer: $400,000 – $515,000
| Scenario | Down Payment | Max Home Price | Monthly Payment |
|---|---|---|---|
| Conservative (25% DTI) | 5% ($21,000) | $420,000 | $2,500 |
| Standard (28% DTI) | 5% ($24,000) | $480,000 | $2,800 |
| Aggressive (33% DTI) | 3.5% FHA | $525,000 | $3,300 |
| VA loan (0% down) | $0 | $450,000 | $2,800 |
Assumes 6.5% interest rate, 30-year fixed, property tax 1.1%, insurance $200/month.
The 28% Rule Breakdown
On a $120,000 gross salary:
| Metric | Amount |
|---|---|
| Gross monthly income | $10,000 |
| Max housing payment (28%) | $2,800 |
| Max total debt payments (36%) | $3,600 |
| Available for non-housing debt | $800 |
If you have existing debt:
| Monthly Debt Payments | Max Housing Payment | Max Home Price (5% down) |
|---|---|---|
| $0 | $2,800 | $480,000 |
| $500 (car payment) | $2,800 | $480,000* |
| $800 (car + student loans) | $2,800 | $480,000* |
| $1,200 (car + loans + cards) | $2,400 | $405,000 |
*Back-end DTI (36%) limits total debt to $3,600/month.
Home Price by Down Payment
| Down Payment | Amount on $450K Home | Loan Amount | Monthly P&I | PMI | Total Payment |
|---|---|---|---|---|---|
| 0% (VA/USDA) | $0 | $450,000 | $2,844 | $0* | $3,257 |
| 3% (conventional) | $13,500 | $436,500 | $2,759 | $237 | $3,209 |
| 3.5% (FHA) | $15,750 | $434,250 | $2,745 | $362 | $3,319 |
| 5% | $22,500 | $427,500 | $2,702 | $225 | $3,140 |
| 10% | $45,000 | $405,000 | $2,560 | $162 | $2,935 |
| 20% (no PMI) | $90,000 | $360,000 | $2,275 | $0 | $2,688 |
*VA has a funding fee instead of PMI.
Affordability by State
| State | Median Home Price | Monthly Payment (est.) | Affordable on $120K? |
|---|---|---|---|
| West Virginia | $130,000 | $820 | ✅ Very comfortable |
| Mississippi | $145,000 | $915 | ✅ Very comfortable |
| Indiana | $200,000 | $1,262 | ✅ Very comfortable |
| Ohio | $195,000 | $1,231 | ✅ Very comfortable |
| Texas | $265,000 | $1,672 | ✅ Very comfortable |
| Florida | $350,000 | $2,209 | ✅ Comfortable |
| Arizona | $376,000 | $2,373 | ✅ Comfortable |
| Colorado | $490,000 | $3,092 | ⚠️ Stretch |
| Washington | $530,000 | $3,344 | ⚠️ Stretch |
| Massachusetts | $590,000 | $3,723 | ❌ Over budget |
| California | $750,000 | $4,733 | ❌ No |
Metros Where $120K Buys a Home
| Metro Area | Median Home Price | Affordable? |
|---|---|---|
| Nashville, TN | $432,000 | ✅ Yes |
| Dallas, TX | $426,000 | ✅ Yes |
| Denver, CO | $537,000 | ⚠️ Stretch |
| Austin, TX | $479,000 | ✅ Yes |
| Portland, OR | $481,000 | ✅ Yes |
| Miami, FL | $530,000 | ⚠️ Stretch |
| Seattle, WA | $698,000 | ❌ No |
| San Diego, CA | $819,000 | ❌ No |
Affording the Median Home
The median US home price is approximately $420,000.
On $120K, you exceed the income needed ($105,000) for a median-priced home. You can comfortably afford the median with room to spare:
| Down Payment | Loan on $420K | Monthly PITI | % of Income |
|---|---|---|---|
| 5% ($21K) | $399,000 | $2,710 | 27% ✅ |
| 10% ($42K) | $378,000 | $2,600 | 26% ✅ |
| 20% ($84K) | $336,000 | $2,305 | 23% ✅ |
Loan Options for $120K Earners
At this income level, you likely qualify for:
| Program | Down Payment | Key Benefit |
|---|---|---|
| Conventional | 5-20% | Best rates, no income limits |
| Jumbo (if needed) | 10-20% | For homes above conforming limit |
| VA loan | 0% | Veterans only, no PMI |
| Physician/Professional | 0-10% | For doctors, lawyers, etc. |
Key Takeaways
- On $120K, you can afford roughly $400,000-$515,000 — above the national median
- You can comfortably buy a median-priced home ($420K) with breathing room
- The 28% rule caps your payment at ~$2,800/month
- Most metros outside coastal areas are affordable — Nashville, Dallas, Austin, Portland
- Coastal cities remain challenging — Seattle, San Diego, and California metros priced out
- 20% down on $450K = very comfortable payment at 27% of income
