How Much Do You Need to Make to Afford a $500,000 Home in Dallas?

As a Dallas Realtor who works with buyers every day — from first-timers to seasoned investors — one of the most common questions I get is:

“How much do I need to make to buy a $500,000 home in Dallas?”

It’s a smart question — and one that deserves more than a generic answer. Affordability depends on several moving parts: mortgage rates, property taxes, homeowners insurance, down payment, and your overall debt-to-income ratio. Let’s break it down in a realistic, Dallas-specific way.

1. The Quick Answer

To comfortably afford a $500,000 home in Dallas, most buyers will need to earn roughly $130,000–$150,000 per year.

That estimate assumes:

• A 20% down payment ($100,000)

• A 30-year fixed mortgage

• An interest rate around 6.2%

• Property taxes and insurance typical for the DFW area

That translates to a total monthly payment around $3,000–$3,400, depending on location and current rates.

2. Why Dallas Numbers Are Unique

Dallas (and surrounding suburbs like Frisco, Prosper, and McKinney) property tax rates in Texas are typically between 2%–2.5% of a home’s value. That means property taxes on a $500,000 home can range from $10,000–$12,500 per year, or roughly $850–$1,050 per month added to your mortgage payment.

That’s why two buyers with identical income levels might qualify for very different homes depending on the suburb and school district they choose.

Pro tip: Some communities — especially newer master-planned neighborhoods — have additional HOA or MUD/PID fees that can add $100–$300 per month. Always factor those in before making an offer.

3. The 28/36 Rule: How Lenders Decide What You Can Afford

Mortgage lenders use what’s called the debt-to-income ratio (DTI) to determine how much house you can afford. The rule of thumb is:

• No more than 28% of your gross monthly income should go toward housing (mortgage, taxes, insurance).

• No more than 36%–43% should go toward total debt (including student loans, car payments, etc.).

So, if your monthly housing cost will be around $3,200, your household income needs to be at least $11,400/month, or about $136,000/year.

4. What If You Don’t Have 20% Down?

Plenty of Dallas buyers purchase with 5–10% down, especially first-time buyers. Here’s how that changes the equation:

• You’ll add Private Mortgage Insurance (PMI), which can run $150–$250 per month.

• Your monthly payment could rise to $3,600–$3,800, meaning your target income might need to be closer to $150,000–$165,000/year.

That said, it’s entirely possible to buy a home with less than 20% down — and many buyers do — especially if your debt levels are low and your credit score is strong.

5. Real-World Example: What a $500K Home Looks Like in DFW

Here’s what you can expect around the metroplex:

• Frisco / Prosper: Newer construction, around 2,000–2,500 sq ft, often in master-planned communities.

• McKinney / Allen: Updated homes in established neighborhoods with mature trees and top-rated schools.

• Dallas (Lakewood, M Streets, Oak Cliff): Townhomes, renovated cottages, or smaller single-family homes closer to the city core.

Each area offers a different mix of taxes, amenities, and appreciation potential — which is why it’s so important to work with someone who knows the nuances of each market.

6. My Professional Take

When clients come to me asking what they can “afford,” I always remind them: It’s not just about what you can qualify for — it’s about what fits your lifestyle comfortably.

You don’t want to be house-poor in a neighborhood you can’t fully enjoy. You want the right home in the right area with the right financial balance.

And that’s where a Realtor who truly understands Dallas comes in — helping you weigh factors like school districts, resale value, property taxes, and commute so your investment makes sense both now and long-term.

Bottom Line

To buy a $500,000 home in the Dallas area today, plan for:

• $130K–$150K annual household income

• $100K down payment (less is fine — we’ll just adjust expectations)

• Monthly payment around $3,200–$3,600, depending on taxes and insurance

But remember — these are broad averages. Every buyer’s situation is different, and the right strategy can make a big difference.

Thinking about buying in Dallas?
Let’s connect. I’ll walk you through your numbers, explore neighborhoods that fit your budget, and help you make a confident, informed move in today’s market.