How much house can I afford on $125,000 a year?
A home up to about
$434,419
On $125,000 a year, you could afford a home up to about $434,419 with a 20% down payment of $86,884. The mortgage payment would be about $2,368 a month, or $2,917 with property tax and home insurance.
- Down payment
- $86,884
- Mortgage
- $347,535
- Payment a month
- $2,368
What it costs each month
| Mortgage payment | $2,368 |
| Property tax | $398 |
| Home insurance | $150 |
| Total | $2,917 |
|---|
How your down payment changes it
| Saved for a down payment | Home up to | Mortgage | Payment a month |
|---|---|---|---|
| $17,766 (5%) | $355,305 | $337,539 | $2,300 |
| $37,261 (10%) | $372,607 | $335,346 | $2,285 |
| $86,884 (20%) | $434,419 | $347,535 | $2,368 |
How it’s worked out
Lenders usually keep housing costs (mortgage, property tax, insurance and PMI) under 28% of your gross income, and all your debt payments under 36%. On $125,000, that's $2,917 a month for housing.
Assumes no other debts, 1.1% property tax, $1,800 a year home insurance and 0.5% PMI below 20% down, using the 28/36 guideline. Freddie Mac’s average 30-year fixed rate was 7.24% on 29 October 2026.
- Uses the 28/36 guideline: housing costs (mortgage, property tax, insurance, PMI and HOA fees) up to 28% of gross income, and all debt payments up to 36%. Lenders can approve higher ratios, so this is a comfortable limit rather than the most you could be lent.
- Assumes all your savings go towards the down payment. Closing costs, usually a few percent of the price, are extra.
- PMI is charged while your down payment is under 20%.
Frequently asked questions
How much house can I afford on $125,000 a year?
On $125,000 a year, you could afford a home up to about $434,419 with a 20% down payment of $86,884. The mortgage payment would be about $2,368 a month, or $2,917 with property tax and home insurance.
How much down payment do I need on $125,000?
With $17,766 saved, you could buy a home up to about $355,305. With $37,261 saved, you could buy a home up to about $372,607. With $86,884 saved, you could buy a home up to about $434,419.