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Published March 14, 2024
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How Much Mortgage Can I Get With $120,000 Salary?

A person making $120,000 may be able to afford a mortgage around $700,000. The mortgage amount you'll qualify for ultimately depends on your credit score, debt and current interest rates.

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Here’s one way to estimate how much mortgage you can get with a salary of $120,000:

  1. Calculate your monthly income. Divide your annual salary of $120,000 by 12 to get your monthly pay: $10,000. 
  2. Find your monthly mortgage max. No more than 39% of your income can go toward your mortgage payment, including property taxes and utilities, per a common lender measurement called your gross debt service ratio. A monthly salary of $10,000 multiplied by 0.39 is $3,900. 
  3. Determine the price range of houses to look at. If you were approved for a 25-year mortgage with an interest rate of 5%, that $3,900 monthly payment translates into a home price of about $700,000 with a 20% down payment.

But these numbers may not apply to everyone who makes $120,000 per year. Why not? 

One reason is that this estimate assumes you can get a mortgage interest rate of 5%. This rate may not be available when you apply for a mortgage. And even if lenders advertise a 5% rate, your entire mortgage application, which includes your credit score, will be reviewed before you receive an offer. A credit score that’s good but not great may result in a rate above advertised rates.

Another reason is that this estimate also includes property taxes of 0.5% per year and about $333 in monthly home insurance and other ongoing costs, like utilities. Your housing-related expenses might be different. 

» MORE: What makes a good credit score?

In addition, if you have other monthly debt payments (student loans, credit card payments), lenders won’t want the total of these payments plus any mortgage payment to exceed 40-44% of your income.

Convert your salary to the monthly payment limits lenders use using this calculator: 

This monthly payment calculator is just a start. There are other factors to consider, including:

To get an answer more closely aligned to your situation, you’ll want to use a mortgage affordability calculator. An affordability calculator lets you control more variables when estimating mortgage payments. 

» NEXT: Learn how to apply for a mortgage


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