In the bay area you cannot afford to purchase a single family home if all you have is a single $100k salary. Full stop.
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At current interest rates, a $1million loan is around $4500/month. If your salary is $100k then you’re left with $46k/year, which is a livable salary in the US, and while Silicon Valley is pricey most of that is in the housing, which you’ve already accounted for. Of course, that $100k puts you in nearly the same tax bracket as billionaires thanks to our regressive tax code, but 80% of your mortgage payment is interest, so deductible.
As long as the rest of your lifestyle is modest - which it is for lots of techies - you’re good to go.
Uh…
I live in CA. EPA (represent!!) My salary is $135k/year. After just health insurance, I clear $6k a month. I have had $450k in 2.6-3.5% interest mortgages since 2008.
The interest deductions mean I only pay $2-3k per year in taxes. I have quite a good accountant, and I go over everything with her as well.
A million dollar mortgage means at $135k a year you have at best $1k per month to live on after your mortgage payment. $200/month for utilities (really), $200 a month for food/tp/etc, $150/month for transportation…
Well, there is a reason I’m 38 and live with roommates. The numbers are mind boggling.
Anyone who wants a breakdown, I can give you the hard numbers.
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Look, as I posted above the annual payment (principal plus interest) for a $1million mortgage is around $54000/year. This is using rates current in California, and is a matter of math, not opinion. That leaves $46K. Yes, this is gross before taxes, also before all the other costs of day to day life (eg, insurance, as you’ve mentioned). The median income in the US is just under this, and all those people also have to pay for health insurance, food, gas, etc., on top of housing costs.
I also live in an expensive part of the country (Honolulu), if you want to get into a cost-of-living pissing match, but I don’t see how that’s helpful. The point is that while any given person might have trouble having a decent life on $100k/year salary with a $1million mortgage, it is doable.
I read elsewhere that $219,000/yr is the minimum income for these deals, which should be easy enough to verify with the employer(s). There’s probably an assumption that most people making that kind of money aren’t total fuckups who are going to get fired for showing up hung over all the time, and if they do happen to get downsized their skills are enough in demand to find new work tout suite.
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But it’s not just in San Fran, though. Housing prices are high in many major cities. It’s a nation wide problem, where too many people can’t afford to live where they work and much of the working and middle class are getting pushed out. Hell, housing prices are getting pushed up in places you wouldn’t expect. My home town (which is about an hour or so away from ATL) is seeing a spike in the price of houses.
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I am not in a cost of living pissing match. I make more than $100k, and my net (because gross is a meaningless number) is $70k a year. A million dollar mortgage is ~$5000 a month (remember, Jumbo’s cost more) plus PMi plus property taxes. 3% down plus PMI, no HOA, insurance, and taxes is $7200 a month.
Monthly Principal & Interest $5,207.17
Monthly Extra Payment $0.00
Property Taxes $1,041.67
Homeowner’s Insurance $291.67
PMI (till 29-Jan 2026) $832.58
HOA Fees $0.00
Total Monthly Payment $7,373.09
Source: me. I own two homes, live in Palo alto, am in the target demographic, and have an accountant.
P.s. yes it is insane! It is beyond nuts. But, err, the weather is nice 
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Sweet jebus…why would anyone buy a 1m$ home on 100k salary? hell, even a 500k home? just…why? That’s ridiculous. Do they not want money, or something?
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I don’t know enough about the terms on these loans to know if there is a premium for the size, or if PMI is required. Online mortgage estimators seem to agree with my estimate. I didn’t account for property taxes on a new (so no Prop 13 protection) house, so fair enough. The 1.25% property tax brings the annual cost of the house to $66,500, which leaves much less out of $100K, but still enough for a life depending (as you point out) on what that $100K means. If $50k/year has to come out of that to pay health insurance, then obviously not.
I was just trying to reply to @ficuswhisperer’s somewhat vague question. I think house prices in the most expensive markets like yours and mine look impossible to people in less insane areas, but people do find ways.
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PMI is required, you pay a premium for a jumbo (anything over $425k), and keep this in mind: social security withholding only applies to the first $118k of ordinary income you make. So the net difference in take home pay between $100k and $125k is extremely significant, but you only see it two months out of the year :D.
I’ve probably said too much, but a $100k salary in the bay area will get you rent for a one bedroom apartment. Not a house.
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Again, we don’t know what the conditions are on this mortgage, which is clearly in its own privileged category; hence the story. As a homeowner in Honolulu I do have some experience with large mortgages.
This:
a $100k salary in the bay area will get you rent for a one bedroom apartment. Not a house.
is probably a little pessimistic, as there are houses for sale in the Bay Area for well under $1million, even under $600k. Of course, they’re not in Menlo Park or Cupertino, and might be rather shitty. I did find this Sac Bee interactive graphic which is relevant to the discussion.
Assumptions: Buyer pays 20 percent down payment. Interest rate of 4 percent on a 30-year mortgage. Annual property taxes and insurance equal 1.2% of home price. Household pays no more than 29 percent of annual gross income on housing payments
I can’t name a single person in the bay area that pays 29% of annual gross income on housing, unless they have roommates or bought 15 years ago.
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In which case the numbers in the article will be conservative, in the sense that some of the houses can be bought for less money then they say.
Btw, something very important got lost–when can I come for a visit? 
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Let’s just agree that the numbers make it possible but it’s also an incredibly bad idea. My mistake for bringing a knife to a math fight with @d_r.
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No, it is not possible. Unless you are using shenanigans that I will not discuss here. I am happy to go over every penny. The economics do, not, work.
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Is California a recourse state, or can you just walk away from an underwater mortgage (at the cost of a dead credit rating)?
If so, I impressed that anyone is willing to touch those mortgages. One 15% downturn (not all that unlikely historically speaking), and you could be looking at a wave of voluntary foreclosures.
I understand that a 25% down-payment was very tough to raise for someone without middle-class parents, but 0%? That seems to be insanity squared! 10% would probably dampen the market to realistic levels, and getting rid of the mortgage interest deduction (may over 20 years) would also make things a lot saner without creating a black hole where the US housing market used to stand…
For the life of me, I still cannot understand why mortgage interest should be deductible, but not rent (or more sanely, neither).
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Ah, well, as long as the online estimators agree with you lets disregard @japhroaig posting hard figures.
The L&L Hawaiian BBQ in Palo Alto isn’t still open?
Need to check, I love Hawaiian food.
