How Much House Can I Afford in Dallas?
A Buyer’s Guide to Understanding Affordability in the Dallas Market
Buying a home is one of the most exciting—and sometimes overwhelming—financial decisions you’ll ever make. If you’re looking to purchase in Dallas, you’re probably asking yourself the same question that every buyer faces: “How much house can I afford?”
It’s a simple question with a multi-layered answer. Affordability isn’t just about your salary or the price tag on the home; it’s about understanding your full financial picture, the Dallas housing market, and what you value in your lifestyle. Below, we’ll break it all down so you can move forward with clarity and confidence.
Step 1: Understand the 28/36 Rule
Lenders often use what’s called the 28/36 rule to determine how much home you can afford.
28%: Your monthly housing costs (mortgage, taxes, insurance, HOA fees if applicable) shouldn’t exceed 28% of your gross monthly income.
36%: Your total debt payments—including housing, car loans, student loans, and credit cards—shouldn’t exceed 36% of your gross income.
Example:
If your household earns $100,000 a year, that’s about $8,333 a month before taxes. Following the 28% rule, your maximum housing payment should be around $2,333 per month.
Step 2: Factor in Dallas Housing Costs
Dallas has a vibrant housing market that offers something for nearly every budget, but prices have climbed in recent years. As of 2025, the median home price in Dallas hovers around $375,000–$400,000, though this varies by neighborhood.
Here’s how that could look with a typical 20% down payment and today’s interest rates:
Home price: $400,000
Down payment (20%): $80,000
Loan amount: $320,000
Interest rate (approx.): 6.5%
Monthly principal & interest: ~$2,022
Taxes & insurance (estimate): $600–$700
Total monthly payment: ~$2,600–$2,700
If your income supports this payment under the 28/36 rule, then a $400,000 home could be within reach.
Step 3: Account for Property Taxes in Dallas
Texas is known for having no state income tax, which is a big win for your paycheck. But keep in mind that property taxes here are higher than the national average. In Dallas County, effective property tax rates often range from 2.0% to 2.3% of your home’s assessed value.
For a $400,000 home, that’s about $8,000–$9,200 annually, or roughly $675–$770 per month. Always include this in your affordability calculation, because it’s one of the largest recurring costs of homeownership in Dallas.
Step 4: Don’t Forget Insurance & HOA Fees
Homeowner’s insurance in Dallas averages around $2,500 annually, or about $200 per month. Storm coverage is especially important, given North Texas’s history with hail and severe weather.
HOA fees vary widely. In some Dallas neighborhoods, you may not have an HOA at all. In others, monthly fees could range from $50 to $400 depending on amenities.
These costs can make a big difference in what you can comfortably afford.
Step 5: Down Payment & Closing Costs
Your down payment is a major factor in determining affordability. While 20% is the traditional benchmark, many Dallas buyers use FHA, VA, or conventional programs that allow as little as 3–5% down.
20% down lowers your monthly payment and avoids private mortgage insurance (PMI).
5% down keeps more cash in your pocket but adds PMI, which can cost $100–$200 monthly.
Also, budget for closing costs, which are typically 2–5% of the loan amount. On a $320,000 loan, that’s $6,400–$16,000 due at signing.
Step 6: Consider Your Lifestyle
“Affordability isn’t just math—it’s personal.” Think about what kind of lifestyle you want after moving into your Dallas home:
Do you want to travel often?
Are you planning to start a family or upgrade your car soon?
Do you enjoy dining out, concerts, and all the experiences Dallas offers?
A lender may approve you for a $2,700 monthly payment, but if that leaves no room for your lifestyle, the home may not truly be “affordable” for you.
Step 7: Get Pre-Approved Early
The Dallas market can be competitive. Before you fall in love with a home in Lakewood, Oak Cliff, or Preston Hollow, get pre-approved by a lender. This not only tells you exactly how much you qualify for but also shows sellers you’re serious.
Pre-approval involves a full review of your income, assets, and credit history, so you’ll walk away with a clear picture of your budget.
Step 8: Explore Dallas Neighborhood Options
Affordability also depends on where you buy. Here are a few examples:
East Dallas (Lake Highlands, Lakewood): Popular family neighborhoods with larger homes; prices are higher, often $500k+.
Park Cities (University Park, Highland Park): Elegant, historic neighborhoods with top schools and luxury living; homes generally range from about $1 million to over $15-20 million.
Preston Hollow: Spacious, tree-lined neighborhoods with luxury estates as well as smaller, older homes; prices range from $600K to over $15 million, depending on style, lot size, location, and condition.
Oak Cliff (Bishop Arts, Kessler Park): Trendy and artsy, with more budget-friendly options, often $300k–$450k.
North Dallas/Plano/Frisco: Great schools, newer homes, but higher price points, typically $450k–$600k+.
Downtown/Uptown: Condos and townhomes, sometimes under $350k, but HOA fees are common.
Knowing your neighborhood preference will help align your budget with realistic expectations.
Step 9: Build in a Safety Cushion
Even if the numbers work out perfectly, life is unpredictable. Job changes, health expenses, or major repairs can pop up. A good rule of thumb is to keep 3–6 months of living expenses in savings after buying your home. This way, you’re financially protected while enjoying your new Dallas address.
Final Thoughts
So, how much house can you afford in Dallas? The answer depends on your income, debt, down payment, and lifestyle. By following the 28/36 rule, factoring in property taxes and insurance, and staying realistic about your goals, you’ll find the sweet spot where comfort meets confidence.
Dallas is a city full of opportunity, with homes for first-time buyers and luxury seekers alike. Take the time to run the numbers, get pre-approved, and work with a trusted local real estate advisor like Slater Real Estate Group. That way, when you find the right home, you’ll know without hesitation: “Yes, I can afford this.”
