It depends on your household income, monthly debt payments, and the amount of money you can put toward a down payment. Our mortgage affordability calculator above can help determine a comfortable mortgage payment for you.

A good rule of thumb is that your total mortgage should be no more than 28% of your pre-tax monthly income. You can find this by multiplying your income by 28, then dividing that by 100.

*For example, let’s say your pre-tax monthly income is $5,000. Your maximum monthly mortgage payment would then be $1,400: $5,000 x 28 = $140,000. $140,000 ÷ 100 =$1,400*

An FHA loan is a mortgage issued by an FHA-approved lender and insured by the Federal Housing Administration (FHA). Designed for low-to-moderate-income borrowers, FHA loans require a lower minimum down payment (aslow as 3.5%) and credit score than many conventionalloans.

With a VA loan you’re not required to make a down payment, and you don’t have to payPMI.

The 28 part of the rule is that you shouldn’t spend more than 28% of your pre-tax monthly income on home-related expenses. The 36 part is that you shouldn’t spend more than 36% of your income on monthly debt payments, including your mortgage, credit cards, and other loans such as auto and studentloans.

It’s a good rule of thumb to start with, but it’s also important to consider your entire financial picture when evaluating home-related expenses.

When gauging home affordability, consider the following factors:

- Credit
- Monthly income
- Your available funds for a down payment and closingcosts
- Your monthly debts and expenses

The following will help your chances of getting a lower interest rate:

- Good credit score
- Strong employment history (at least 2 years of work with no gaps)
- As much savings as possible for a down payment. If you make a down payment of at least 20% of your home’s value, you won’t need to payPMI.
- Consider different types of mortgages. For example, if you can afford higher monthly payments, a 15-year fixed mortgage term will have lower interest rates.
- Shop different lenders to comparerates

If you make a down payment of at least 20% of your home’s purchase price, you won’t need to pay PMI.

Depending on the mortgage, down payments lower than 20% are acceptable, and can go as low as 3% in some cases, but you’ll have to pay PMI in addition to yourmortgage.

As a general rule of thumb, you should always have 3 months’ worth of living expenses on hand, including mortgage, in the event of an unexpected circumstance.

It’s also advised to consider other home-buying expenses such as closing costs.

It’s wise to purchase a home below your budget, because you’ll have more money left over each month for savings or otherexpenses.

There are a few reasons why it may be wise to wait to purchase a home:

- More time to save for a downpayment
- Build up your emergency fund
- Build credit score
- Wait for better market conditions (lower interest rates, better home prices if market isdeclining)

Improving your debt to income ratio means lowering the percentage. Paying off your debts such as loans and credit cards, and increasing your income will help you achievethis.

Calculate your monthly debt by adding up all of your monthly minimum payments toward loans and creditcards.

Closing costs are generally between 2% and 5% of your home’s purchase price.

**Credit score**

A credit score is a number assigned to you to represent your creditworthiness. Lenders use it to determine how likely you are to make on-time payments on your loans.

Different credit scoring models calculate credit scores based on a variety of factors. Mint utilizes the VantageScore model, which measures credit on a scale ranging from 300 to 850. Your VantageScore is determined by sixfactors:

- Payment history
- Age and types of credit
- Credit utilization
- Total balances and debt
- Recent credit inquiries
- Available credit

While there’s no single way to define a good credit score or bad credit score, VantageScore does provide guidance on grading score on a scale of A to F:

- Grade A: 781 - 850
- Grade B: 720 - 780
- Grade C: 658 - 719
- Grade D: 601 - 657
- Grade F: 300 - 600

**Debt to income ratio**

Debt to income (DTI) ratio is a percentage that expresses how much of your pre-tax annual income is dedicated to your monthly debt payments. Lenders look at DTI as a way of gauging your ability to make on-time monthly payments on a loan.

The lower your DTI percentage is, the more favorably lenders will look at you. A lower DTI indicates a healthy balance between debt and income. In general, mortgage lenders look for a DTI that’s no greater than 36%.

**Down payment**

A down payment is a cash payment that you make at the onset of a large purchase, such as a new home. It’s represented by a percentage of the total price of the purchase.

In the United States, the ideal down payment for a house is 20%, but people typically make down payments from anywhere between 5% and 20% depending on the loan.

Aside from owing less on your home, there are other advantages to putting at least 20% toward your down payment, such as not having to pay private mortgage insurance (PMI). If you put down less than 20%, you’ll need to pay PMI because lenders see the loan as higherrisk.

**Private mortgage insurance (PMI)**

PMI is insurance that some home lenders require you to pay if you make a down payment of less than 20%. PMI is designed to protect the lender, not the buyer, in the event that the buyer defaults on their payments.

You can avoid paying PMI by purchasing a less expensive home, or by simply waiting until you’re able to afford at least 20% for your down payment. Additionally, some loans do not require PMI with a down payment that is less than 20%, so it’s important to explore and compare youroptions.

**Interest rate**

An interest rate is the amount that a lender charges you in exchange for providing the loan, expressed as a percentage of the loan amount.

Your creditworthiness determines the interest rate a lender will offer to charge you. For example, if you have a high credit score and your debt to income ratio (DTI) is less than 36%, you will receive a lower and thus better interest rate. If you have a lower credit score and your DTI is higher than 36%, you’ll likely be charged a higher interest rate because the lender sees the loan as higherrisk.

**Loan term**

The length of time in which you agree to repay your loan entirely. Most mortgages have either a 15 or 30-year term.

**Property tax**

Property tax is tax paid on real estate by the owner of the property. It is dependent upon the location of the property and is calculated by the localgovernment.

**Homeowners insurance**

Homeowners insurance is property insurance that provides coverage if damages or losses occur to the home or property itself, or to valuables or assets inside the home. It also provides liability coverage to protect the homeowner if another person suffers personal injury or property damages while on the homeowner’s property.

**HOA fees**

If a person moves into a residence that is part of a homeowners association (HOA), they will have to pay monthly fees to theHOA.

The HOA uses these fees to maintain the neighborhood, especially when there are community amenities such as a neighborhood clubhouse or park. People who live in condominiums frequently have to pay HOA fees because of the upkeep of common areas, such as landscaping or the community swimming pool. These fees can also cover shared utility costs such as water and trash.

HOA fees can vary based on the services that the HOA provides. It’s important for potential homebuyers to thoroughly research HOAs and the fees they impose, in the areas in which they’re considering purchasing ahouse.

**Pre-qualification**

Getting pre-qualified for purchasing a home happens after a person gives preliminary information to a lender, such as income, debt, and assets. This allows the lender to initially assess the potential amount of loan they might issue to the person. While pre-qualification is a good first step in the homebuying process, it is not an approval for a loan. It’s an initial evaluation of how much loan the person may be able to get.

It’s important to note that pre-approval is very different from pre-qualification, in that pre-approval requires a much more thoroughinvestigation and credit check of the potential homebuyer, to proceed to the next step in the homebuyingprocess.

## FAQs

### How do you calculate what house you can afford? ›

Most financial advisors recommend spending no more than 25% to 28% of your monthly income on housing costs. **Add up your total household income and multiply it by .** **28**. At most, you may be able to afford a $1,120 monthly mortgage payment.

**How much house can I afford making $70000 a year? ›**

If you're an aspiring homeowner, you may be asking yourself, “I make $70,000 a year: how much house can I afford?” If you make $70K a year, you can likely afford a home **between $290,000 and $360,000***. That's a monthly house payment between $2,000 and $2,500 a month, depending on your personal finances.

**How much house can I afford for $3000 a month? ›**

So if you make $3,000 a month ($36,000 a year), you can afford a house with monthly payments **around $1,230** ($3,000 x 0.41). Use our VA home loan calculator to estimate how expensive of a house you can afford.

**How much can I afford for a house if I make $100000 a year? ›**

Start with the 28/36 rule

If you're earning $100,000 per year, your average monthly (gross) income is $8,333. So, your mortgage payment should be **$2,333 or less**.

**How much income do you need for 400k mortgage? ›**

What income is required for a 400k mortgage? To afford a $400,000 house, borrowers need $55,600 in cash to put 10 percent down. With a 30-year mortgage, your **monthly income should be at least $8200** and your monthly payments on existing debt should not exceed $981. (This is an estimated example.)

**How much home can I afford with 80k salary? ›**

So, if you make $80,000 a year, you should be looking at homes priced between **$240,000 to $320,000**. You can further limit this range by figuring out a comfortable monthly mortgage payment. To do this, take your monthly after-tax income, subtract all current debt payments and then multiply that number by 25%.

**How much house can I afford if I make $85000 a year? ›**

You can afford a **$255,000 house**.

**How much house can I afford making $120000 a year? ›**

Safe debt guidelines

So start by doing the math. If you make $50,000 a year, your total yearly housing costs should ideally be no more than $14,000, or $1,167 a month. If you make $120,000 a year, you can go up to **$33,600 a year**, or $2,800 a month—as long as your other debts don't push you beyond the 36 percent mark.

**How much of a house can I afford if I make $75000 a year? ›**

Start with the 28/36 rule

If you're making $75,000 each year, your monthly earnings come out to $6,250. To meet the 28 piece of the 28/36 rule, that means your **monthly mortgage payment should not exceed $1,750**. And for the 36 part, your total monthly debts should not come to more than $2,250.

**How much house can I afford for $1400 a month? ›**

Deciding how much house you can afford

Joe's total monthly mortgage payments — including principal, interest, taxes and insurance — shouldn't exceed $1,400 per month. That's a **maximum loan amount of roughly $253,379**.

### What house can I afford with 4000 a month? ›

High Balance Conforming Loans

The final sales price of a home would need to be no greater than $905,750.00 to achieve that $4,000 a month mortgage.

**How much money do you need to make a year to afford a $300000 house? ›**

How much do I need to make to buy a $300K house? To purchase a $300K house, you may need to make **between $50,000 and $74,500 a year**. This is a rule of thumb, and the specific salary will vary depending on your credit score, debt-to-income ratio, the type of home loan, loan term, and mortgage rate.

**Can I afford a 400k house on 100K salary? ›**

A 100K salary means you can afford a **$350,000 to $500,000** house, assuming you stick with the 28% rule that most experts recommend.

**What mortgage can I afford with 200k salary? ›**

There are a ton of variables, and these are just loose guidelines. That said, if you make $200,000 a year, it means you can likely afford a home **between $400,000 and $500,000**.

**What should my monthly budget be for 100K salary? ›**

Assuming you make $100,000 a year, your monthly expenses should be **up to $6,000**. This includes rent or mortgage payments, car payments, insurance, food, utilities, and other necessary expenses.

**How much income do I need for a 1 million mortgage? ›**

Experts suggest you might need an annual income **between $100,000 to $225,000**, depending on your financial profile, in order to afford a $1 million home. Your debt-to-income ratio (DTI), credit score, down payment and interest rate all factor into what you can afford.

**How much do you need to make to qualify for a 600k mortgage? ›**

You need to make $222,019 a year to afford a 600k mortgage. We base the income you need on a 600k mortgage on a payment that is 24% of your monthly income. In your case, your monthly income should be about $18,502. The monthly payment on a 600k mortgage is $4,440.

**How much is a 500k house monthly payment? ›**

Monthly payments on a $500,000.00 mortgage by interest rate

At a 7.00% fixed interest rate, your monthly mortgage payment on a 30-year mortgage might total **$3,326.51 a month**, while a 15-year might cost $4,494.14 a month.

**How much house can I afford with 90k income? ›**

How much house can I afford? You can afford a **$270,000 house**.

**How much an hour is $80000 a year? ›**

$80,000 yearly is how much per hour? If you make $80,000 per year, your hourly salary would be **$38.46**. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week.

### How much house can I afford with 60k salary? ›

The usual rule of thumb is that you can afford a mortgage two to 2.5 times your annual income. That's a **$120,000 to $150,000** mortgage at $60,000. You also have to be able to afford the monthly mortgage payments, however.

**How much is $85,000 a year in California? ›**

If you make $85,000 a year living in the region of California, USA, you will be taxed $23,812. That means that your net pay will be **$61,188 per year**, or $5,099 per month.

**What is 120k a year hourly? ›**

If you make $120,000 per year, your hourly salary would be **$57.69**. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week.

**How much house can I afford if I make $110000 a year? ›**

You can afford a **$330,000 house**.

**What is the monthly payment on 800000? ›**

Monthly payments on an $800,000.00 mortgage

At a 7.00% fixed interest rate, your monthly mortgage payment on a 30-year mortgage might total **$5,322.42 a month**, while a 15-year might cost $7,190.63 a month.

**What is the 10 15 rule mortgage? ›**

The 10/15 rule

If you can manage to pay 10% of your mortgage payment every week (in addition to your usual monthly payment) and apply it to the principal of your loan, you can pay off your 30-year mortgage in just 15 years. This chart displays offers for paying partners which may impact the order in which they appear.

**What is a good salary in the United States? ›**

According to the US Bureau of Labor Statistics (BLS), the median annual wage across all occupations in 2021 was $58,260 [1]. For a person living in Phoenix, Arizona, where the median wage is $56,610, earning **above the national average** may be considered very good.

**What is the 28 36 rule? ›**

Definition. The 28/36 rule states that **your total housing costs should not exceed 28% of your gross monthly income and your total debt payments should not exceed 36%**. Following this rule aims to keep borrowers from overextending themselves for housing and other costs.

**What is the monthly payment on a $400 K house? ›**

“The average monthly payment for a $400,000 home is **$3,037**,” says Walsh. “That's based on the typical first-time homebuyer down payment of 7%, average interest rate of 6.61%, average property tax rate of 1%, average homeowners insurance of $140 per month, and average Private Mortgage Insurance of 0.6%.”

**How much house can I afford for $1,800 a month? ›**

With a $1,800 payment and $0 down you can afford a **maximum house price of $300,826** with these loan terms.

### Will mortgage rates go down 2023? ›

Freddie Mac: Forecasts the average 30-year mortgage to start at 6.6% in Q1 2023 and end at 6.2% in Q4 2023. Realtor.com economist, Jiayi Xu: “**Mortgage rates are likely to move in the 6% to 7% range over the next few weeks**, which continues to pose a significant challenge to affordability.”

**What house can I afford with 5000 a month? ›**

Let's say you earn $5,000 a month (after taxes). According to the 25% rule I mentioned, that means your monthly house payment should be **no more than $1,250**. (That includes the principal, property taxes, HOA fees, etc.)

**How much house can I afford for $5 000 a month? ›**

Determining how much you can afford — the 28/36 rule

Multiply $5,000 by 0.28, and your total is $1,400. If you abide by this rule, you can afford to spend **up to $1,400 per month** on your house, including your mortgage, interest, property taxes, homeowners insurance, and homeowner's association dues.

**How much is a 300k mortgage per month? ›**

On a $300,000 mortgage with a 3% APR, you'd pay **$2,071.74 per month on a 15-year loan** and $1,264.81 on a 30-year loan, not including escrow. Escrow costs vary depending on your home's location, insurer, and other details.

**How much do I need to make to buy a 800k house? ›**

For homes in the $800,000 range, which is in the medium-high range for most housing markets, DollarTimes's calculator recommends buyers bring in $119,371 before tax, assuming a 30-year loan with a 3.25% interest rate. The monthly mortgage payment is estimated at $2,785.

**How much do you have to make a year to afford a $500000 house? ›**

Generally speaking, mortgage lenders say that you can afford to buy a house that's 2.5 to 3 times greater than your annual salary. So in order to buy a $500,000 house, you would need to make **at least $167,000** to meet the 2.5x income requirement.

**How much should you make to buy a 350k house? ›**

You need to make **$129,511 a year** to afford a 350k mortgage. We base the income you need on a 350k mortgage on a payment that is 24% of your monthly income. In your case, your monthly income should be about $10,793.

**How much money an hour is 100k a year? ›**

$100,000 yearly is how much per hour? If you make $100,000 per year, your hourly salary would be **$48.08**. This result is obtained by multiplying your base salary by the amount of hours, week, and months you work in a year, assuming you work 40 hours a week.

**What is the rule of thumb for mortgage? ›**

Lenders call this the “front-end” ratio. In other words, **if your monthly gross income is $10,000 or $120,000 annually, your mortgage payment should be $2,800 or less**. Lenders usually require housing expenses plus long-term debt to less than or equal to 33% or 36% of monthly gross income.

**How much is a $250 K mortgage for 30 years? ›**

On a $250,000 fixed-rate mortgage with an annual percentage rate (APR) of 4%, you'd pay **$1,193.54 per month** for a 30-year term or $1,849.22 for a 15-year one. It's important to note that these estimates only include principal and interest.

### Can I afford a 220k house? ›

How much do you need to make to be able to afford a house that costs $220,000? To afford a house that costs $220,000 with a down payment of $44,000, **you'd need to earn $32,827 per year before tax**. The monthly mortgage payment would be $766.

**How much is a downpayment on a 300k house? ›**

Most lenders are looking for **20%** down payments. That's $60,000 on a $300,000 home. With 20% down, you'll have a better chance of getting approved for a loan. And you'll earn a better mortgage rate.

**What is the $27.40 rule? ›**

As a general rule, **you can save $10,000 in a year by saving $27.40 a day**, $192.30 a week, $384.62 every two weeks, or $833.33 a month. It will take discipline, cutting back, and increasing income to make this happen.

**What percentage of your salary should go to retirement? ›**

Aim to save at least **15%** of your income annually for retirement.

**How much should I have saved if I make 100K a year? ›**

You should distinguish between short-term and long-term saving goals, and have separate accounts for each." To put it into context, Gonzalez says, "Ideally, you should start by saving about a quarter of your gross income, and increase with age; with a $100K salary, you should [start by] saving about **$2,000 a month**."