How Much House Can I Afford on $50K a Year (2024)

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What House Can I Afford on $50K a Year

By: Michele Lerner Updated By: Ryan Tronier Reviewed By: Paul Centopani

January 25, 2024


14 min read

Here’s how much house you can afford on $50K a year

It is certainly possible to buy a home on a $50,000 salary. Homeownership is becoming more accessible for many borrowers thanks to low down payment loans and down payment assistance programs.

However, everyone’s budget is different. Even those who earn the same annual salary may have different price ranges when looking for a new home. This is due to multiple factors — including your mortgage rate, down payment, loan term, and more — impacting your budget.

So if you’ve ever wondered how to buy a home on $50K a year, here’s how to find out.

Check your home buying options. Start here

In this article (Skip to...)

  • Affordability by interest rate
  • Affordability by down payment
  • Affordability by DTI
  • What determines your budget
  • Mortgage preapproval
  • Home buying tips
  • FAQ

>Related: How to buy a house with $0 down: First-time home buyer

How much house can I afford on $50K a year?

A person who makes $50,000 a year might be able to afford a house worth anywhere from $180,000 to nearly $300,000.

That’s because your annual salary isn’t the only variable that determines your home buying budget. You also have to consider your credit score, current debts, mortgage rates, and many other factors.

Check your home buying options. Start here

Just to show you how much these different variables can affect your home buying power, take a look at a few examples below.

Home affordability by interest rate

Regardless of your annual salary, the mortgage interest rate you qualify for will affect how much house you can afford. For those with a low or moderate income, timing your home purchase when interest rates are low is a great way to increase your home buying budget.

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Annual IncomeDesired Monthly PaymentInterest Rate (30-Year Fixed)How Much House Can I Afford?

The example above assumes a 3% down payment and no monthly debts outside the mortgage. Rates shown are for sample purposes only. Your own interest rate and payment will vary.

Remember, the interest rate a lender will offer you depends on your credit score and down payment, among other factors. So getting a lower interest rate isn’t just a matter of timing the market. It’s also important to present a strong application and shop around for the best deal.

Home affordability by down payment

Your down payment also significantly impacts what you can afford. Most low-down-payment mortgage loans require putting down at least 3% of the home’s value. As an example, if the home value is $180,000, a 3% down payment would be $5,400.

But the more you pay up front, the more you can borrow.

For example, here’s how much a home buyer making $50,000 a year might afford depending on their down payment savings:

Annual IncomeDesired Monthly PaymentDown PaymentHow Much House Can I Afford?
$50,000$1,790$6,830 (3%)$275,881
$50,000$1,790$13,300 (5%)$282,351
$50,000$1,790$27,140 (10%)$296,191

The examples above assume a 7% fixed interest rate on a 30-year loan and no monthly debts outside the mortgage. Your own rate and monthly payment will vary.

Home affordability by debt-to-income ratio

While many factors impact the amount you can borrow, your debt-to-income ratio (DTI) is essential to the equation. DTI ratio compares your monthly gross household income to the monthly payments you owe on all your debts, including housing expenses. The standard maximum DTI for most mortgage lenders is 41%.

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Mortgage lenders use DTI ratio to determine how much of a monthly housing payment a borrower can afford. The higher your existing monthly debt payments, the less you’ll be able to spend on your mortgage to maintain a good DTI.

Ideally, you want a 30-40% debt-to-income ratio to qualify for a mortgage loan. For example, say you make $50,000 a year and want to stay at a 36% DTI.

In that case, your total debts can’t exceed $1,500. Here’s how that affects your home buying budget:

Annual IncomeMonthly DebtsDesired Mortgage PaymentHow Much House Can I Afford?

These figures are based on the respective desired mortgage payments, a 7% interest rate, and a 3% down payment.

Monthly debts include items such as minimum credit card payments, car loans, student loans, and even your estimated mortgage payment. However, monthly expenses for utilities and streaming services are not considered monthly debt payments.

Understanding DTI: Front-end ratio vs. back-end ratio

As you shop around between mortgage lenders, you may come across the terms front-end ratio and back-end ratio. Both are versions of the debt-to-income ratio. Essentially, they’re just another way to measure how your income and cash flow affect your monthly housing payment.

  • Back-end ratio: This works like your debt-to-income ratio, which we discussed above. It compares your existing monthly debt payments, including your mortgage, to your monthly gross income
  • Front-end ratio: Measures your housing costs alone as a percentage of your gross income. If you aim for a front-end ratio of 28% and earn $50,000 a year, you could spend at most $14,000 a year on housing. That’s about $1,167 a month

As you make your own calculations, remember that your gross monthly income is the amount you earn before income tax or medical insurance deductions. For most people, gross income is a bigger number than take-home pay.

What factors influence how much house you can afford?

While income is often the first factor people consider when thinking about buying a home, it’s far from the only criteria that matter.

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Your ability to afford a home is influenced by a variety of financial variables, each contributing to the big picture of your home-buying capacity. Here are some key factors to consider:

  • Down payment: The amount you can put down upfront significantly affects the size of the mortgage you’ll need. A larger down payment can reduce your monthly payments and may open up better financing options
  • Financing: The type of mortgage you choose, whether it’s a fixed-rate or adjustable-rate mortgage, will impact your monthly payments and the total cost of the loan. Different types of mortgages come with their own sets of requirements and benefits
  • Credit score: Your credit score is influenced by your credit history, and it’s key in determining the interest rate you’ll be offered. A higher credit score can get you a lower interest rate, making the home more affordable in the long run
  • Loan-to-value ratio (LTV): Your LTV ratio compares the value of the home you’re buying to the size of your loan. A lower LTV often means you have fewer liabilities relative to the value of the home, which can make you more attractive to lenders. Additionally, a lower LTV can reduce the need for private mortgage insurance
  • PITI percentage: PITI stands for principal, interest, taxes, and insurance – the four components of a monthly mortgage payment. The PITI percentage is your monthly mortgage payment compared to your gross monthly income. Lenders typically use this percentage to determine your borrowing capacity. A lower PITI percentage means a larger portion of your income is available for other expenses, potentially allowing you to qualify for a larger loan.

By considering these factors along with your income, you’ll have a more comprehensive understanding of what you can realistically afford when buying a home.

Mortgage preapproval will confirm your home buying budget

One of the easiest ways to find your price range is to get a preapproval from a lender or mortgage brokerage.

Get started on your mortgage preapproval. Start here

Mortgage loan preapproval is like a dress rehearsal for your actual mortgage application. A lender will assess your financial situation without making you go through the full loan application. They’ll examine your annual salary, existing debt load, credit report, and down payment size.

This can tell you whether you’re qualified for a mortgage and how much home you might be able to afford. You could also learn whether you can afford a 15-year loan term or stick with a 30-year mortgage. A pre-approval can also show whether you’d be better off with an FHA or conventional loan.

Finally, your preapproval letter shows you the added monthly costs of homeownership, such as home insurance, real estate taxes, HOA fees, and mortgage insurance if necessary.

Home buying costs to budget for

When budgeting for the costs of buying a home, look beyond just the down payment and mortgage payments. Here are some key expenses to consider.

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  • Initial purchase costs: This includes the down payment, closing costs, immediate renovations or repairs, and legal fees. Some states require the involvement of real estate attorneys in the home-buying process, so that’s a potential cost to consider
  • Ongoing expenses: Beyond your mortgage payments, this category encompasses utility bills, homeowner’s insurance, property tax rates, and potentially homeowner’s association fees if you’re buying into a community with shared amenities
  • Maintenance and repairs: Budget for both routine maintenance and unexpected repair costs. Homes require upkeep, and it’s better to be prepared.
  • Personal financial obligations: If you have other significant financial responsibilities, like child support, these will continue after you buy a home and should be included in your budget.

To get a better idea of how much home you’ll be able to afford on a $50,000 a year income, try a mortgage calculator. You can get a more realistic picture of what you’ll need to budget for when buying a home.

Tips to increase your home buying budget on $50K a year

The average cost of a home in the U.S. is $402,600, according to the National Association of Realtors. However, expect to pay more for your dream home in high-cost housing markets like New York, Los Angeles, Las Vegas, Seattle, Denver, and Dallas, to name a few.

With such high home sale prices, it’s important for first-time buyers to increase their home buying power. Here are several steps you can take to do so.

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1. Increase your down payment

If you have the cash, you may want to increase your down payment to 10% or 20%. A larger down payment raises your maximum home price, which may be enough to buy your desired home. If you don’t have the cash, keep in mind that you can ask relatives for gift money.

You can also apply for home buyer assistance programs from state and local governments that provide down payment and closing cost funds. Your eligibility for these programs may vary based on your personal finances.

2. Pay down some of your existing debt

The minimum payments on your credit accounts determine your debt-to-income ratio. By paying down your credit card debt or eliminating a car payment, you can qualify for a bigger home loan. For example, in the scenario above, reducing your monthly obligations by $200 could increase your maximum price from $234,000 to $270,600.

3. Use a piggyback loan to put 20% down

Another strategy that could help increase your budget is to finance your home with two different home loans simultaneously. This strategy is known as an “80-10-10 loan” or “piggyback loan.”

An 80-10-10 mortgage means you’d get:

  • A first mortgage for 80% of the home’s cost
  • A second mortgage for 10% (usually a home equity line of credit)
  • A cash down payment of 10%

This gives you the benefit of having a bigger home buying budget (thanks to the larger down payment). It also eliminates the need for private mortgage insurance (PMI), usually required on conventional loans with less than 20% down.

4. Buy a home with a conventional loan

It’s possible to get a conventional loan with a down payment as low as 3% of the purchase price. What’s more, that down payment can often be covered with down payment assistance, a grant, or gift funds from a family member. Just note that to qualify for a 3%-down conventional loan, most lenders require a credit score of at least 620 or 640. For those with lower credit scores, an FHA loan might be more appealing.

5. Buy a home with an FHA loan

FHA-insured loans allow a 3.5% down payment as long as the applicant has a FICO score of 580 or higher. Those with FICOs between 500 and 579 must put 10% down.

However, FHA mortgage insurance can make these loans more expensive. They require both an upfront premium and a monthly addition to your loan payment. Still, FHA loans allow for much higher debt-to-income ratios compared to conventional loans. Sometimes you can use up to 50% of your before-tax income or more toward your FHA loan payment.

Alternatively, you could always refinance out of the FHA loan later to eliminate these mortgage insurance fees.

Verify your FHA loan eligibility. Start here

6. Improve your credit report

Conventional (non-government) loans often come with risk-based pricing, meaning if your credit score is lower than 740, you’ll pay a higher interest rate. Mortgage insurance costs also increase as your credit score decreases. These rising costs chip away at your housing price range.

This step-by-step guide may help you get a lower interest rate and lower monthly mortgage payments by improving your credit. It could also help you afford your dream home. You’ll also stand a better chance of qualifying for a loan program with a higher debt-to-income ratio if your score is higher.

7. Negotiate with the seller

There is no reason you can’t ask for seller contributions instead of negotiating for a lower purchase price. Depending on your mortgage type, the seller can contribute 3% to 6% of the home price in closing costs.

This can make all the difference when you want to buy a new home and stop renting. Seller contributions can cover closing costs, buy your interest rate down to a more affordable level, or make a one-time payment to cover your mortgage insurance.

Remember that sellers in hot real estate markets are less likely to grant concessions. But if they’re motivated to sell quickly or the home inspection reveals issues, you may have room to negotiate.

8. Consider buying a multi-family home

One strategy first-time home buyers often don’t consider is purchasing a multi-family home instead of a single-family one. By purchasing a duplex, triplex, or fourplex, you can live in one unit and rent the others out. This gives you access to primary residence loan programs with low rates and closing costs. But you also get the advantage of rental income to help pay your mortgage. You can even use a low-rate VA loan or FHA mortgage as long as you live in one of the units.

FAQ: What house can I afford on $50K a year?

Check your mortgage eligibility. Start here

How can I buy a home with a $50K salary?

The home buying process is fairly standard, regardless of salary. You’ll carry out a home search using sites like Zillow or Redfin, hire a real estate agent, and apply for a home loan. If approved, you’ll arrange a home inspection, title search, and homeowners insurance before doing a final walkthrough on your closing date.

How much house can I afford on $50K a year?

You can generally afford a home for between $180,000 and $250,000 (perhaps nearly $300,000) on a $50K salary. But your specific home buying budget will depend on your credit score, debt-to-income ratio, and down payment size. As an example, if you make $50K, have less than $200 in monthly debt payments, and have $13,000 down, you can afford a $248,000 home with a 30-year fixed-rate loan at 6 percent.

How much house can I afford with an FHA loan?

The Federal Housing Agency (FHA) offers mortgages with loan limits of up to $472,030 for a single-family home in most areas of the U.S. That limit jumps to $1,089,300 in higher-cost areas of the country, including San Francisco, San Diego, and Philadelphia. FHA loans also offer flexible approval guidelines for borrowers. You can qualify with a minimum credit score of 580 and a down payment of 3.5 percent. However, you’ll also pay mortgage insurance premiums for the life of the loan. So budget accordingly.

How much house can I afford with a VA loan?

If you’re an eligible service member or veteran, the U.S. Department of Veterans Affairs may offer you an affordable mortgage with no purchase price limit. Better yet, a VA loan has no down payment requirement whatsoever. And if you do choose to put money down, you won’t pay mortgage insurance if it’s less than 20 percent.

How much house can I afford with a USDA loan?

The USDA’s rural development program offers eligible buyers mortgages with no purchase price limits. The program has strict guidelines for the location of the property being purchased. And you’ll also need to meet household income eligibility, credit score minimums, and other lender requirements. If you qualify, you stand a good chance of being able to afford a bigger house with the USDA loan than with a conventional one.

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, type of home loan, loan term, and mortgage rate. Still, with a 3.5 percent down payment on a 30-year fixed-rate loan at 6 percent, you should be able to afford a $300,000 house with an annual salary of $74,500.

What are the monthly payments on a $300K house?

The monthly payment on a $300,000 house is in the ballpark of $2,000 a month. Your specific housing payment will depend on your credit score, loan type, loan amount, and down payment size. But with $20,000 down on a 30-year fixed-rate loan at 6 percent, you can estimate that a $300K house will cost you about $2,000 each month.

Bottom line: What house can I afford on $50K a year?

As the examples above illustrate, two different borrowers making $50,000 a year might have very disparate home-buying budgets. To determine how much house you can afford, consider your income, debts, down payment savings, and projected housing costs such as homeowners insurance and property taxes.

When you’re ready to begin your home buying process, experiment with a home affordability calculator. Doing so will help you see how down payments and interest rates will affect the amount of money you’ll need to buy a home.

Check out available loan programs from multiple lenders to see how much house you can afford.

Time to make a move? Let us find the right mortgage for you

How Much House Can I Afford on $50K a Year (1)

Authored By: Michele Lerner

The Mortgage Reports


Michele Lerner, author of New Home 101, is an award-winning freelance journalist with more than two decades of experience. Her work appears in The Washington Post, New Home Source, Fox Business, MSN, Yahoo,, and more.

How Much House Can I Afford on $50K a Year (2)

Updated By: Ryan Tronier

The Mortgage Reports


Ryan Tronier is a personal finance writer and editor. His work has been published on NBC, ABC, USATODAY, Yahoo Finance, MSN Money, and more. Ryan is the former managing editor of the finance website Sapling, as well as the former personal finance editor at Slickdeals.

How Much House Can I Afford on $50K a Year (3)

Reviewed By: Paul Centopani

The Mortgage Reports


Paul Centopani is a writer and editor who started covering the lending and housing markets in 2018. Previous to joining The Mortgage Reports, he was a reporter for National Mortgage News. Paul grew up in Connecticut, graduated from Binghamton University and now lives in Chicago after a decade in New York and the D.C. area.

How Much House Can I Afford on $50K a Year (2024)


How Much House Can I Afford on $50K a Year? ›

On a 50k salary, how much mortgage could you afford? According to this rule of thumb, you could afford $125,000 ($50,000 x 2.5). Let's say you have a 4.5 percent interest rate and choose a 30-year mortgage. Your monthly mortgage payment would be $633.

How much can I afford a house if I make 50k a year? ›

The 28% of your income rule

Considering a 20% down payment, a 6.89% mortgage rate and a 30-year term, that's about what you can expect to pay on a $185,900 home. If you only put 5% down and had a 6.89% mortgage rate and a 30-year term, you could likely afford a $159,300 home.

How much home can I afford with 55k salary? ›

With a 8% interest rate, the biggest loan you could get based on the 28% rule is $174,897, and the most house you could afford is $218,621. To buy this house with a 20% down payment, you would need a down payment of $43,724.

How much income do I need for a 200k mortgage? ›

To be approved for a $200,000 mortgage with a minimum down payment of 3.5 percent, you will need an approximate income of $62,000 annually.

How much house can I afford if I make $45000 a year? ›

On a salary of $45,000 per year, you can afford a house priced at around $120,000 with a monthly payment of $1,050 for a conventional home loan — that is, if you have no debt and can make a down payment. This number assumes a 6% interest rate.

How much house can I afford if I make $36,000 a year? ›

On a salary of $36,000 per year, you can afford a house priced around $100,000-$110,000 with a monthly payment of just over $1,000. This assumes you have no other debts you're paying off, but also that you haven't been able to save much for a down payment.

Can I afford a 300K house on a 60K salary? ›

An individual earning $60,000 a year may buy a home worth ranging from $180,000 to over $300,000. That's because your wage isn't the only factor that affects your house purchase budget. Your credit score, existing debts, mortgage rates, and a variety of other considerations must all be taken into account.

What credit score is needed to buy a house? ›

Generally speaking, you'll likely need a score of at least 620 — what's classified as a “fair” rating — to qualify with most lenders. With a Federal Housing Administration (FHA) loan, though, you might be able to get approved with a score as low as 500.

How much is 50k a year hourly? ›

$50,000 yearly is how much per hour? If you make $50,000 per year, your hourly salary would be $24.04.

How much an hour is a 50k salary? ›

$50,000 a year is how much an hour? If you make $50,000 a year, your hourly salary would be $24.04.

Can I afford a 250k house on 50k salary? ›

A person who makes $50,000 a year might be able to afford a house worth anywhere from $180,000 to nearly $300,000. That's because your annual salary isn't the only variable that determines your home buying budget. You also have to consider your credit score, current debts, mortgage rates, and many other factors.

Can you get a mortgage making 40K a year? ›

With proper planning, a salary of $40K should be able to get you into a home in many U.S. markets. However, you'll want to make sure you keep a close eye on your credit score and save up for a down payment or find programs to help with one. Over time, the small, determined steps you take will lead you to your goals.

Is 50k enough for a down payment? ›

A $50,000 down payment is a good down payment for a $350,000 house. It represents a 14.28% down payment, which is considered to be a good amount by most lenders. A larger down payment will lower your monthly mortgage payments and your overall interest costs.

Can someone who makes 40K a year afford a house? ›

If you have minimal or no existing monthly debt payments, between $103,800 and $236,100 is about how much house you can afford on $40K a year. Exactly how much you spend on a house within that range depends on your financial situation and how much down payment you can afford to invest.

How expensive of a house can I buy making 40K a year? ›

How much house can I afford with 40,000 a year? With a $40,000 annual salary, you should be able to afford a home that is between $100,000 and $160,000. The final amount that a bank is willing to offer will depend on your financial history and current credit score.

How much house can I afford if I make $60000 a year? ›

The 28/36 rule holds that if you earn $60k and don't pay too much to cover your debt each month, you can afford housing expenses of $1,400 a month. Another rule of thumb suggests you could afford a home worth $180,000, or three times your salary.

What car can I afford making 50k a year? ›

If you make a $50,000 gross salary, after taxes (depending on where you live) your monthly take-home pay is roughly $3,230. Based on the 10% rule, you could afford, at most, a $323 monthly car payment. If you take out a 60 month (5 year) auto loan at 8% interest, you can afford a $17,000 car.

How much house can I afford making $60,000 a year? ›

The 28/36 rule holds that if you earn $60k and don't pay too much to cover your debt each month, you can afford housing expenses of $1,400 a month. Another rule of thumb suggests you could afford a home worth $180,000, or three times your salary.

Can I buy a house making 60k a year? ›

A $60,000 income is within a healthy range for buying your first home. Check out this example to see how the budget breaks down. While home prices are going up, the dream of owning a home is available to a wide range of people. It's not just limited to people with net worths.

How much income is needed for a 400k mortgage? ›

To afford a $400,000 home, assuming a 20% down payment and a 6.5% interest rate on a 30-year mortgage, you would need a gross monthly income of approximately $7,786.55. This assumes you have $1,000 in monthly debt.

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