I Make $100,000 a Year. How Much House Can I Afford?

If you make $100,000 a year, you're earning roughly what the average American brings in. Recent research from The Ascent found that in 2021, the average U.S. income was $97,962. The median U.S. income in 2021, however, was $69,717, and that figure may be more representative of Americans on a whole.

If you earn $100,000 a year, you might have a lot more wiggle room when it comes to buying a home than someone with a lower salary. But it's still important not to get in over your head. Here's how to avoid that.

Follow the 30% rule

As a general rule, your monthly housing costs, including your mortgage payments, property taxes, and homeowners insurance, should not exceed 30% of your take-home pay. Sticking to that threshold might lower your chances of struggling with bills or housing expenses.

Your take-home pay for a $100,000 salary might vary depending on your tax-filing status and the deductions you take. If you're contributing money out of your paychecks for expenses like health insurance and 401(k) contributions, your take-home pay may be different from someone earning $100,000 who isn't doing those things. So it's important to look at your specific monthly take-home pay, figure out what 30% of it entails, and try your best to stick to that limit.

If your $100,000 salary leaves you with $6,500 a month in take-home pay, that means you can generally afford to spend $1,950 a month on housing. Go beyond that, and you risk struggling to keep up.

Consider your other expenses

The 30% rule assumes that you have average expenses. But if some of your non-housing expenses are notably large, then you may want to consider limiting your monthly housing costs to 20% to 25% of your take-home pay.

Let's say you have young children whose daycare and summer camp costs are exorbitant. Or, let's say you have a medical condition that requires you to spend more than the average person on medication and care. It may also be that you had to sign an expensive car loan to purchase a vehicle because yours stopped running just when automobile prices and borrowing rates skyrocketed.

These personal factors need to be considered heavily. If you have a few specific expenses that are already straining your budget, you may want to be even more conservative when it comes to housing costs.

You should also consider how important it is to you to have extra money for things like leisure and vacations. The more you spend on a home, the less you'll have left for the things you enjoy. So even if you can afford to spend, say, $1,950 a month on housing, you may want to stick to $1,800 so you have more wiggle room to spend on your hobbies.

All told, you don't want to get in over your head in the course of buying a home. If you make an effort to limit yourself to 30% of your take-home pay and you factor in your other costs, you may be more likely to end up with a home that isn't a struggle to keep up with.