How Much House Can I Afford On A $70K Salary? | Bankrate (2024)

Buying a home on a $70,000 salary — a bit below the national median household income of $74,580, according to Census data — might be a tight squeeze. That’s especially true in today’s high-rate environment, which makes affordability even more challenging, and worse if you have your heart set on an expensive metro area with a high cost of living. However, if you explore flexible loan products and more affordable locations, you may still have some homebuying options. Let’s do the math to see what kind of house you can afford on a $70K salary.

The 28/36 rule

No matter how much money you make, to estimate how much you can afford to spend on a home, many experts recommend the 28/36 rule as a great place to start. This guideline states that you should spend no more than 28 percent of your income on housing costs, and no more than 36 percent on your total debt payments, including housing costs. (So that would also include credit card bills, car payments and any other debt you may carry.)

Breaking down the math to apply the 28 percent rule, here’s how much you can afford in housing payments on your salary:

  • $70,000 per year is about $5,833 per month.
  • 28 percent of $5,833 equals $1,633, so that’s the upper limit on how much you should spend on monthly housing costs.
  • Assuming a 20 percent down payment on a 30-year fixed-rate loan at an interest rate of 7 percent, you can afford the payments on a $240,000 home, according to Bankrate’s mortgage calculator. That scenario would yield principal and interest payments of $1,277 per month, which gives you a few hundred dollars to cover variables like property taxes, home insurance premiums and HOA fees (if applicable), before hitting that $1,633 max.

Keep in mind, though, that a 20 percent down payment on a $240,000 home is $48,000, a significant amount of savings. You’d need to pay that full amount upfront, plus closing costs, to get to a monthly payment that comes in below your limit. A less expensive home or a lower mortgage interest rate would also lower the monthly cost.

How much house can you afford?

Besides salary and the price tag of the house, many other factors influence how much house you can afford on your $70,000 income. Take the following considerations into account as you create your budget:

  • Down payment amount: The more you are able to pay upfront, the less you’ll need to borrow for your home purchase. Making a larger down payment might hurt today, but it will save you plenty of money in principal and interest costs in the long run, if you can swing it.
  • Credit score: Lenders view your credit score as a key indication of your ability to repay your home loan, so you do whatever you can to up that number before applying for a mortgage. A stronger credit score will get you a lower mortgage rate, which means you’ll pay less interest on the money you borrow.
  • Debt-to-income ratio: It’s also important to present a favorable debt-to-income ratio, or DTI, which is a measure of your income versus your total debt. Ideally, your DTI should be under 36 percent — the other piece of the 28/36 rule — but some lenders are willing to go slightly higher.
  • Location: Considering that the national median home price in August 2023 was $407,100, a budget of $240K will likely price you out of many areas and leave you with fewer options than those shopping at higher price points. You’ll need to be flexible in terms of home size and geography. However, many metro areas have prices right around your max: The median price in Indianapolis, for example, is right on target at $240K, according to Redfin. Don’t forget, also, that median means half the homes sold for more, and half for less. So just because a market’s median price is above your limit doesn’t necessarily mean it’s out of your reach.
  • Size: If a single-family home is out of your reach in your desired area, consider a condo or townhouse. These will have cheaper prices and can get you earning equity as a homeowner sooner.

Home financing options

Many different types of loans are available to support a home purchase. Much depends on your credit score and down payment amount, but a range of borrowers should be able to finance a home if they shop around to find a loan product that works for them. Here are some common examples:

  • Conventional: This is the most popular way of financing a home purchase and typically requires a credit score of at least 620. If you qualify, you can put down as little as 3 percent for a down payment — but remember, that will result in more interest and principal to be paid over time.
  • FHA: These flexible loans can be good options for those with lower credit scores. A score between 500 and 579 requires a 10 percent down payment, and with a score of 580 or higher you can put down just 3.5 percent.
  • USDA: These loans serve low- and moderate-income borrowers in designated rural areas, so if you’re not hoping to live in a big city, they’re worth looking into.
  • VA: No down payment at all may be required for qualified military service members, veterans and surviving spouses to get a VA loan.

First-time homebuyer programs

The thought of saving for a hefty down payment on your $70K salary might feel daunting. Luckily, help is available, especially if you’re buying your first home. Many state and local governments throughout the country have down payment assistance programs that offer low-interest and forgivable loans, as well as grants, to help offset down payment and closing costs for qualified borrowers.

Mortgage preapproval

Before you even start house-hunting, it’s smart to get preapproved for a mortgage. This is an important budgeting step: A preapproval letter gives you a good estimate of how much a lender might be willing to loan you, which can help you keep your search within realistic parameters. A preapproval submitted with an offer also shows sellers that you can afford the purchase, which can help a lot in competitive markets.

Next steps

Ready to start your homebuying journey? Finding an experienced local real estate agent is a good first step. An agent who knows your market well can guide you toward homes within your budget, or toward affordable areas you might not have thought of, and can also help ensure a smooth transaction all the way through to closing.

How Much House Can I Afford On A $70K Salary? | Bankrate (2024)


How Much House Can I Afford On A $70K Salary? | Bankrate? ›

Breaking down the math to apply the 28 percent rule, here's how much you can afford in housing payments on your salary: $70,000 per year is about $5,833 per month. 28 percent of $5,833 equals $1,633, so that's the upper limit on how much you should spend on monthly housing costs.

How much rent can I afford on $70k? ›

So you're looking at somewhere near $3791 after tax per month. To be safe, a rule of thumb is that you should aim for 1/3 of your salary or less on rent. That will leave the appropriate amount for spending money, insurance, transportation, etc etc. So my suggestion is to look for $1263 per month or less.

How much house can I afford making $75,000? ›

How much mortgage can I afford making $75,000 a year? Using the 28% rule, you can afford a maximum monthly payment of $1,750. Assuming you get a loan at a 7% interest rate with a 10% down payment, you could afford a home worth up to $292,222.

Is 70k a good salary for a single person? ›

In some regions with a lower cost of living, a $70,000 salary can provide a comfortable lifestyle and the ability to save for the future, making it a good income for your age. However, in high-cost-of-living areas, this salary might require careful budgeting to maintain the same standard of living.

Can I buy a house if I make 70k a year? ›

Breaking down the math to apply the 28 percent rule, here's how much you can afford in housing payments on your salary: $70,000 per year is about $5,833 per month. 28 percent of $5,833 equals $1,633, so that's the upper limit on how much you should spend on monthly housing costs.

Can I buy a house making $70000 a year? ›

Your DTI, interest rate, down payment, and other factors all play a role as well. The good news is that at $70,000, your income is slightly higher than the median annual household income of $67,521. Depending on the rest of your financial situation, you may already be well on your way to affording your dream home.

Can I afford a 400k house with $70 K salary? ›

How much income you need to buy a house in a specific price range largely depends on the type of loan you're applying for, where you live and other factors. For example, at current mortgage rates, borrowers with an FHA loan and a 10% down payment would need to earn about $70,000 a year to afford a $400,000 house.

How to budget 70k salary? ›

The rule recommends that you allocate 50 percent of your budget for essentials (housing, transportation, utilities and groceries), 20 percent toward financial priorities (retirement contributions, savings, and debt payments), and the remaining 30 percent for bonus (read: fun) lifestyle expenses.

How much should I spend on rent making $70,000? ›

Experts recommend renters spend no more than 25% to 30% of their monthly income on rent. So, for example, if you make $60,000 per year, your rent and renters insurance shouldn't go higher than $18,000—or $1,500 per month.

Can I afford a 300k house on a 70k salary? ›

So, to estimate the salary you'll need to comfortably afford a $300,000 home purchase, multiply the annual total of $24,000 by three. That leaves us with a recommended income of $72,000. (Keep in mind that this does not include a down payment or closing costs.)

Can I buy a house making 75k a year? ›

Individuals with a salary of $75,000 a year should aim for a home price ranging from $150,000 to $225,000, which would yield a mortgage payment of $998 to $1,497,” said Miles, who cautioned to budget for costs beyond the loan itself.

Can I buy a house if I make 75k a year? ›

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.

Is 70K a year middle class? ›

The Pew Research Center defines the middle class as households that earn between two-thirds and double the median U.S. household income, which was $65,000 in 2021, according to the U.S. Census Bureau.

Is 70K livable? ›

You may be able to live just comfortably without much savings . After taxes, the monthly salary will be about $4K. Of which rent will take away about $2K. Depending on your life style, number of members in the family, you may have to lead a life of pay check to pay check.

What is a livable salary for one person? ›

The survey analyzed the annual living expenses for single people in all 50 states, along with data from the U.S. Bureau of Labor Statistics. You need to make at least $80,013 per year to have a "living wage" in California, the survey found.

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 will be approved for a mortgage if I make $65000 a year? ›

On a salary of $65,000 per year, as long as you have very little debt, you can afford a house priced at around $175,000 with a monthly payment of $1,517 with no down payment. This number assumes a 6% interest rate and a standard debt-to-income (DTI) ratio of 36%.

Is 72k a good salary for a single person? ›

If you are a single person in Los Angeles making around $70,000 a year, you are still considered low-income, according to a new statewide study. The California Department of Housing and Community Development released the report in June and found that income limits have increased in most counties across California.

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