How Much House Can I Afford in Phoenix?Know Your Real Number Before You Shop
As a rule of thumb, you can afford a home priced around 3 to 4 times your annual income, but your real number depends on four things: your income, your existing monthly debts, your down payment, and your interest rate. In Phoenix, a buyer earning $100,000 a year with good credit and manageable debt can typically afford a home in the $320,000 to $400,000 range. The fastest way to know your exact number is a free pre-approval.
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I'm Mark Fazio, a mortgage broker here in Phoenix, and I've helped buyers figure out this exact question for over 10 years. Let me walk you through how it actually works, so the number you're shopping with is real and not a guess.
The 4 things that decide what you can afford
1. Your income
Lenders look at your gross monthly income, before taxes. A common guideline is the 28/36 rule: your housing payment stays at or below 28% of your gross monthly income, and your total monthly debt stays at or below 36%. On a $100,000 salary, that's roughly $2,333 a month for housing under the 28% side.
2. Your existing debts
This is the one most people underestimate. A $600 car payment, student loans, and credit card minimums all eat into what you can borrow. A single $600 monthly payment can lower your buying power by $80,000 or more. Paying down a card before you apply can move your number more than almost anything else.
3. Your down payment
You don't need 20% down to buy in Phoenix. FHA loans start at 3.5% down, conventional loans can start at 3% for qualified buyers, and VA loans are zero down for eligible veterans. On a $375,000 home, that's a down payment anywhere from $0 to about $13,125. Arizona also offers down payment assistance programs that can lower your out-of-pocket cost further.
4. Your interest rate
Your rate is tied closely to your credit score, and it directly affects your monthly payment. A higher score gets you a lower rate, which means you can afford more home for the same monthly budget. The gap between a 620 and a 760 score can be hundreds of dollars a month on the same loan.
What's specific to buying in Phoenix
Two local factors change the math here. Arizona property taxes are relatively low compared to much of the country, which helps your monthly payment. But homeowners insurance and, in some communities, HOA dues in Maricopa County can add up, so they belong in your affordability math from the start. Neighborhoods vary widely too, what you can buy in Maryvale looks very different from Arcadia or North Scottsdale, even on the same budget. When you're ready, here's how I help you buy a home in Phoenix.
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Reviewed by
Mark Fazio, Licensed Mortgage Loan Officer
NMLS #1455718 · Barrett Financial Group (NMLS #181106) · Phoenix, AZ
Mark Fazio is a licensed Phoenix mortgage broker with 10+ years of experience and over 1,000 home loans closed. He shops dozens of lenders to find the lowest rate on purchase, refinance, and specialty loans, and personally guides every client from the first call through closing.