Buying a home is one of the biggest financial decisions most people make, and with rising real estate prices, it’s natural to wonder: Can I afford a $700,000 house if I make $100,000 a year? This question doesn’t have a one-size-fits-all answer. Instead, it depends on several factors including debt, savings, location, interest rates, and your lifestyle. Let’s break it down and see what’s really possible.
Understanding Affordability: The 28/36 Rule
What Is the 28/36 Rule?
One of the most commonly used guidelines in the mortgage world is the 28/36 rule. It suggests:
- No more than 28% of your gross monthly income should go toward housing expenses.
- No more than 36% of your income should go toward total debt payments (including your mortgage, car loans, credit cards, etc.).
If you earn $100,000 per year (or about $8,333 per month before taxes):
- 28% of that is around $2,333 for housing.
- 36% equals about $3,000 for all monthly debt obligations.
This sets a general upper limit for what most lenders consider “affordable.”
Breaking Down the Costs of a $700K Home
Mortgage Payment
Let’s assume:
- 20% down payment ($140,000)
- $560,000 mortgage
- 30-year fixed-rate mortgage at 7%
Your monthly mortgage payment (principal + interest) would be roughly $3,726.
Property Taxes and Insurance
Add to that:
- Property taxes: around 1.25% annually = ~$729/month
- Homeowners insurance: about $100/month
Total monthly cost: $3,726 + $729 + $100 = ~$4,555
This is well above the recommended 28% housing-to-income ratio.
What If You Have No Debt and Strong Savings?
If you’re debt-free and have significant savings, you may be able to push the limits of affordability.
Other Factors That Work in Your Favor:
- Excellent credit score (better loan terms)
- Higher down payment (lower mortgage amount)
- Co-borrower income (combined household income)
- Additional income streams (bonuses, side gigs)
Even so, you may be stretching your budget, leaving less room for savings, emergencies, or lifestyle choices.
How Much House Can You Comfortably Afford?
A more realistic estimate for someone making $100,000/year would be a home priced around $300,000 to $400,000, assuming moderate debt and average living expenses.
Use this rough formula:
Multiply your annual income by 3 to 4. $100,000 x 3 = $300,000 $100,000 x 4 = $400,000
Why Staying Within Budget Matters
Overspending on a home can:
- Limit your ability to save for retirement
- Increase financial stress
- Leave you house-rich but cash-poor
Tips for Buying a Home on a $100K Salary
- Boost your credit score before applying for a mortgage
- Pay down high-interest debts to reduce your debt-to-income ratio
- Consider homes in more affordable neighborhoods or towns
- Save aggressively to increase your down payment
- Use online affordability calculators to run personalized numbers
Final Verdict: Is a $700K House Realistic on $100K Income?
For most people, a $700,000 home is out of reach on a $100,000 salary—unless you have no debt, a substantial down payment, and perhaps a second income.
If you’re determined, consider strategies like:
- Buying a starter home first and upgrading later
- Exploring loan assistance programs
- House hacking (renting part of your property)
Ready to Take the Next Step?
Understanding your financial situation is key to making a smart home-buying decision. Speak with a mortgage advisor, use online calculators, and start planning your budget today.
Remember: Just because you can buy a house doesn’t mean you should stretch your finances to the max. Smart financial choices now can lead to greater freedom later.
Want more personalized guidance? Explore our tools and resources to help you navigate the path to homeownership with confidence!
Andre Cuevas provides career insights, job search strategies, and professional advice to help individuals navigate the job market and achieve their career goals.
