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On a $120,000 salary, the affordability gap
$600,000 is what a lender will offer on $120,000. $390,000 is what most financial advisors would call comfortable. The math.
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Bank Approves
$600,000+
~$3,600/mo P&I
Comfortable Range
$360,000 – $420,000
~$2,325/mo at midpoint
Take-Home Pay
~$7,000/mo
after federal + state + FICA
On a $120,000 salary, your gross monthly income is $10,000. Lenders will approve you for $600,000 or more, pushing your DTI to 43% — the regulatory max for most conventional loans. But a comfortable 28% DTI guideline points to a smaller home in the $360,000 – $420,000 range, with the precise number depending on your existing debts, down payment, and local taxes. The gap between bank-approves and comfortable-spend grows wider as the home gets more expensive — that's the trap most middle-income buyers fall into.
What banks typically approve at a $120,000 income
- Bank max ($600,000): ~$3,600/month principal-and-interest at 7% / 10% down / 30-year. Pushes back-end DTI toward 43% — the regulatory ceiling for most conventional loans.
- Comfortable ($360,000 – $420,000): keeps housing costs under 28% of gross. Most financial advisors call this the "house-poor threshold" — stay below it and you have room for savings, life, and emergencies.
- Conservative ($265,000): ~20% DTI on housing. Maximum optionality: you can absorb an income disruption, save aggressively for retirement, or weather a 1-in-10-year recession without scrambling.
Three scenarios at the comfortable midpoint ($390,000)
| Down payment | Loan amount | Monthly P&I* | Notes |
|---|---|---|---|
| 5% down | $371,000 | $2,475/mo | FHA territory — requires mortgage insurance for the life of the loan, adds 0.55-1.05% APR-equivalent. |
| 10% down | $351,000 | $2,325/mo | A common middle ground. PMI required but eliminable with appreciation or extra payments. |
| 20% down | $312,000 | $2,075/mo | No PMI. Most conservative DTI. Maximum mortgage flexibility. |
*At 7% APR, 30-year fixed. Doesn't include property taxes, insurance, HOA, or PMI. The interactive calculator below covers all of those.
What this page doesn't account for
The headline ranges above use national-average assumptions for property taxes (1.1%) and insurance ($1,500/year). Real numbers vary significantly by state — Texas property tax averages 1.6% of home value, California is around 0.75%, and New Jersey is over 2.2%. Hurricane-exposed states (FL, LA) carry insurance premiums 3-4x the national average. The interactive calculator below lets you override these for your specific market. State-specific affordability tables (with property tax and insurance baked in) are on the roadmap.
Your Finances
Comfort Level
Most financial advisors recommend staying under 28%. Banks will approve up to 43%.
You can afford
$275,549
at 28% DTI (Conservative)
Debt-to-Income Gauge
Your actual DTI: 28% (housing: 21.8%)
Conservative (25%)
$242,387
Comfortable buffer
Recommended (28%)
$275,549
Standard guideline
Bank Maximum (43%)
$441,355
Highest approval
Monthly Payment Breakdown
Adjusting income up or down
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