If I Make $200,000 A Year What Mortgage Can I Afford?
You can afford a home up to $800,000 with a mortgage of $760,000.
This assumes a 5% down conventional loan, low debts, good credit, and a rate of 7%, and a total debt-to-income ratio of 45%.
Keep in mind that many factors can influence this number like property taxes, homeowner’s insurance, HOA dues, credit score, and more. Apply with a lender to find your personalized maximum home price.
See what you can afford with a $200k salary.
Home affordability by monthly debt payments
Your debt level affects your buying power perhaps more than anything else.
For instance, say you have $1,500 in monthly debt payments like student loans and credit card payments. At a salary of $200,000 per year, adding a $750-per-month auto payment would reduce your maximum home price by $110,000.
Related: Buying A Car Before A House Could Be a Big Mistake
Lenders can approve you for a payment up to about 45% of your gross monthly income toward debt payments. That’s roughly $7,500 for an annual salary of $200,000. About 36% of your gross income ($6,000) can be used for the house payment leaving about 9% of income for other debts.
| Yearly income | $200,000 |
| Monthly income | $16,667 |
| Max house payment (36%) | $6,000 |
| Max total debt + housing payments (45%) | $7,500 |
In mortgage-speak, that’s a 36% front-end debt-to-income (DTI) ratio and a 45% back-end DTI. This is about the highest DTI lenders will approve at this loan amount.
Following is what you might qualify for depending on your current debt load.
| Annual Income | Monthly Debt | Max House Payment | Home Price |
|---|---|---|---|
| $200,000 | $0-$1,500 | $6,000 | $800,000 |
| $200,000 | $2,000 | $5,500 | $725,000 |
| $200,000 | $2,500 | $5,000 | $650,000 |
| $200,000 | $3,000 | $4,500 | $580,000 |
| $200,000 | $3,500 | $4,000 | $500,000 |
*Assumes a conventional loan at 5% down and 7% interest rate, $500/mo property taxes and $100/mo insurance, 740 credit, 0.53% mortgage insurance factor, no HOA. Your rate and costs will vary.
Related: Buying a Home With Zero Down Payment
Maximum home price by down payment
Your down payment dramatically affects affordability.
For one, your loan balance drops with a higher down payment, resulting in a lower payment. Additionally, you pay less mortgage insurance or none at all when you put more down.
| Annual Income | Down Payment | Monthly Payment | Home Price |
|---|---|---|---|
| $200,000 | 5%* | $6,000 | $800,000 |
| $200,000 | 10% | $6,000 | $860,000 |
| $200,000 | 20% | $6,000 | $1,010,000 |
*Note that a 3.5% down FHA loan is not available in most areas, since the FHA loan limit in most of the U.S. is $472,030 for 2023. Likewise, a 3% down conventional loan is not available for loans more than the standard conventional limit of $726,200. Calculations assume a conventional loan with 5-20% down, 7% interest rate, $500/mo property taxes and $100/mo insurance, standard mortgage insurance, 740 credit score, no HOA. Your rate and costs will vary.
Check your minimum down payment. Start here.
Maximum home price by interest rate
Interest rate is another significant determiner of your maximum home price. If rates drop, it’s a great time to enter your home search.
| Annual Income | Interest Rate | Monthly Payment | Home Price |
|---|---|---|---|
| $200,000 | 8% | $6,000 | $730,000 |
| $200,000 | 7% | $6,000 | $800,000 |
| $200,000 | 6% | $6,000 | $875,000 |
| $200,000 | 5% | $6,000 | $975,000 |
*Assumes a conventional loan at 5% down, up to $1,500/mo debt payments, $500/mo property taxes and $100/mo insurance, 740 credit, standard mortgage insurance, no HOA, 45% backend DTI. Your rate and costs will vary.
Maximum home price by desired debt-to-income level
While many financial gurus suggest you should have a debt-to-income of 25% or less, it’s just not realistic in most markets. Pushing your total DTI from 25% to 45% increases your buying power by $275,000 at an income of $200,000.
| Annual Income | DTI | Payment | Home Price |
|---|---|---|---|
| $200,000 | 25% | $4,167 | $525,000 |
| $200,000 | 35% | $5,833 | $780,000 |
| $200,000 | 45% | $6,000 | $800,000 |
*Assumes a conventional loan at 5% down, 7% rate, no debts for 25% and 35% scenarios, $500/mo property taxes and $100/mo insurance, 740 credit, standard mortgage insurance, no HOA. Your rate and costs will vary.
Ways to increase your buying power
If you’re struggling to find a home that you can qualify for, there are ways to increase your maximum purchase price.
Consider an adjustable-rate mortgage (ARM): As seen above, reducing your rate from 7% to 6% can increase your buying power by $75,000 at your income level. An ARM rate eventually adjusts but starts off fixed for at least 3-5 years. That’s a lot of time to refinance or increase your income to afford a potentially higher payment later.
Buy down your rate: Consider buying down your rate with points, especially if you can get closing cost credit from the seller or builder.
Avoid HOAs: Homeowner association dues can be hundreds of dollars per month. Dues add to your DTI which limits your buying power.
Make a bigger down payment or get gift funds. The lower your mortgage balance, the lower your payment will be. Try to find a down payment assistance program or get a gift from family to reduce your loan amount.
Use an FHA loan. While the maximum loan is only about $472,000 in most areas, these loans are lenient on debt-to-income ratios. Conventional loans limit you to about 45% DTI including all debts and housing payment (50% in select cases). FHA’s max is 46.9% front-end DTI and 56.9% back-end.
Pay off debt: Paying off a $750 car payment can increase your buying power by $110,000.
FAQ
Depending on your existing debts, you may be able to afford an $800,000 home with 5% down ($760,000 mortgage). Your exact price depends on your debts, interest rate, property taxes, homeowner’s insurance, HOA dues, loan program, and payment comfort level.
Reducing your debt payments by $750 per month can increase your maximum home price by about $100,000 if you make $200,000 per year. Paying off debt will help you qualify for a better home that will suit your needs longer.
You don’t need a high credit score, but it will help you qualify for more. Conventional mortgage insurance is expensive for those with credit scores below about 720.
You can afford a lot of house with a $200k salary
If you have a good salary and credit, you might be surprised at what you can afford. Get started on your pre-approval so you’re ready when you find the right home.
Check your personalized maximum home price.
