How much house can I afford for $5000 a month mortgage payment?
Follow the 28/36 Rule
For example, say your household brings in $5,000 every month in gross income. Multiply your monthly gross income by . 28 to get a rough estimate of how much you can afford to spend a month on your mortgage. In this situation, you shouldn't spend more than $1,400 on your monthly mortgage payment.
For example, let's say you earn $4,000 each month. That means your mortgage payment should be a maximum of $1,120 (28 percent of $4,000), and your other debts should add up to no more than $1,440 each month (36 percent of $4,000).
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.
Ideally, you should make $208,000 or more a year to comfortably manage an $800,000 home purchase, based on the commonly used 28 percent rule (which states that you shouldn't spend more than 28 percent of your income on housing).
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.
The monthly income rule
“You want to make sure that your monthly mortgage is no more than 28% of your gross monthly income,” says Reyes. So if you bring home $5,000 per month (before taxes), your monthly mortgage payment should be no more than $1,400.
To calculate this, multiply your monthly income by 28 or 36 and then divide it by 100. For example, with a $4,500 monthly income, you should spend no more than $1,260 on monthly housing expenses.
According to the 28/36 rule, your mortgage payment should not exceed 28% of your gross monthly income. Hence, assuming no other debt, you'd need a monthly income before taxes and deductions of at least $5,821, or an annual gross income of at least $70,000 to be eligible for the mortgage.
Here's a simple look at how the 28/36 rule applies to your $60K salary: $60,000/12 = $5,000 per month. $5,000 x 0.28 = $1,400 (your target maximum for a monthly mortgage payment) $5,000 x 0.36 = $1,800 (your target maximum for your entire debt obligations)
Key Takeaways. The general rule is that you can afford a mortgage that is 2x to 2.5x your gross income. Total monthly mortgage payments are typically made up of four components: principal, interest, taxes, and insurance (collectively known as PITI).
How much income do I need to make 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, type of home loan, loan term, and mortgage rate.
Here's a simple industry rule of thumb: Housing expenses should not exceed 28 percent of your pre-tax household income.
If a borrower has no other debt obligations, a conforming loan for a $250,000 property with 10% down in a 7% rate environment would require a gross monthly income of approximately $3,870, factoring in a 50% debt ratio. This translates to an annual salary of around $46,450.
Annual Salary | $40,000 | $40,000 |
---|---|---|
Mortgage Rate | 7.287% | 7.287% |
Home Purchase Budget (25% monthly income on mortgage payments) | $103,800 | $114,900 |
Home Purchase Budget (28% monthly income) | $109,500 | $127,600 |
Home Purchase Budget (36% monthly income) | $141,100 | $159,300 |
If you follow the 2.5 times your income rule, you divide the cost of the home by 2.5 to determine how much money you need to earn annually to afford it. Based on this rule, you would need to earn $100,000 per year to comfortably purchase a $250,000 home.
In some regions with a lower cost of living, a $36,000 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.
If you're single and make $35,000 a year, then you can probably afford only about a $105,000 home. But you almost certainly can't buy a home that cheap. Single people have a tough time buying homes unless they make an above-average salary. Marriage allows a couple to combine their incomes to better afford a home.
Generally, it's recommended to spend between 25% to 33% of your gross monthly income on housing. For a $70,000 salary, this translates to a monthly mortgage payment of approximately $1,450 to $2,000. However, the exact amount can vary based on your personal circ*mstances and the type of loan you choose.
To determine how much you can afford using this rule, multiply your monthly gross income by 28%. For example, if you make $10,000 every month, multiply $10,000 by 0.28 to get $2,800. Using these figures, your monthly mortgage payment should be no more than $2,800.
If you make $3,000 a month ($36,000 a year), your DTI with an FHA loan should be no more than $1,290 ($3,000 x 0.43) — which means you can afford a house with a monthly payment that is no more than $900 ($3,000 x 0.31). FHA loans typically allow for a lower down payment and credit score if certain requirements are met.
What is the 50 30 20 rule?
The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.
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.
By following the 28/36 rule, you can avoid finding yourself underwater with too much debt. So, let's say you make around $6,000 per month. Your monthly mortgage payment shouldn't be over $1,680 and your monthly debt including monthly mortgage shouldn't exceed $2,160.
Monthly Pretax Income | Remaining Income After $1,200 Debt Payments | Maximum Home Value (10% Down Payment and 7% Interest With 30-Year Loan) |
---|---|---|
$4,500 | $3,000 | $140,333 |
$5,500 | $4,000 | $187,111 |
$6,500 | $5,000 | $233,889 |
$7,500 | $6,000 | $280,556 |
How much FHA mortgage payment can I afford? FHA loans require your monthly mortgage payment to be generally no more than 31% of your gross monthly income, or the total you earn before taxes.
References
- https://www.quora.com/How-much-house-can-I-afford-if-I-make-30-000-a-year
- https://www.investopedia.com/ask/answers/102015/do-interest-rates-increase-during-recession.asp
- https://money.usnews.com/loans/mortgages/mortgage-rate-forecast
- https://smartasset.com/mortgage/how-much-mortgage-can-i-afford
- https://www.axios.com/2024/03/22/fed-target-interest-rate-2025-2026
- https://www.marketwatch.com/guides/car-loans/auto-loan-rates-may-come-down-in-2024/
- https://www.chase.com/personal/mortgage/education/financing-a-home/what-percentage-income-towards-mortgage
- https://abcnews.go.com/Business/2024-best-year-buy-new-car-truck/story?id=106790136
- https://www.forbes.com/uk/advisor/mortgages/mortgage-interest-rates-forecast/
- https://www.homelight.com/how-much-house-can-i-afford
- https://www.zillow.com/mortgage-calculator/house-affordability/
- https://medium.com/finance-for-everyday-life/6-common-budget-mistakes-you-cant-afford-to-make-b452dc3bcf50
- https://www.quickenloans.com/learn/percentage-income-mortgage
- https://themortgagereports.com/84644/income-for-200k-mortgage
- https://www.bankrate.com/mortgages/what-percent-of-income-should-go-to-mortgage/
- https://themortgagereports.com/76824/what-is-a-good-mortgage-rate-today
- https://www.cnbc.com/select/what-is-the-28-36-rule-for-buying-a-home/
- https://www.nationwidevisas.com/usa-immigration/average-salary-in-usa/
- https://www.sofi.com/learn/content/i-make-60k-a-year-how-much-house-can-i-afford/
- https://www.snagajob.com/salary-calculator?pay=80000&period=year
- https://www.cainmortgageteam.com/20-down-payment-on-a-300-000-house/
- https://www.rocketmortgage.com/learn/house-poor
- https://www.quora.com/It-seems-that-4-000-a-month-is-considered-a-low-income-but-after-doing-research-I-feel-that-I-could-be-very-happy-with-this-along-with-being-able-to-afford-a-new-house-and-new-car-Am-I-missing-something
- https://finance.yahoo.com/personal-finance/mortgage-rates-today-sunday-april-21-2024-100058912.html
- https://www.fidelity.com/viewpoints/personal-finance/before-buying-house
- https://finance.yahoo.com/news/live-1-000-per-month-200011859.html
- https://www.sofi.com/learn/content/i-make-45k-a-year-how-much-house-can-i-afford/
- https://time.com/personal-finance/article/percentage-of-income-mortgage/
- https://www.schwabmoneywise.com/my-life/how-much-can-you-afford
- https://www.forbes.com/advisor/mortgages/mortgage-interest-rates-forecast/
- https://www.earnest.com/blog/rent-and-the-30-percent-rule/
- https://www.quickenloans.com/learn/how-much-house-can-i-afford
- https://www.thetimes.co.uk/money-mentor/mortgage-property/when-will-interest-rates-go-down-uk
- https://www.bankrate.com/real-estate/income-needed-for-800k-house/
- https://www.bankrate.com/real-estate/income-needed-for-200k-home/
- https://www.businessinsider.com/car-prices-decreasing-2025-inventory-incentives-trim-levels-2023-6
- https://stairsfinancial.com/blog/how-much-house-can-i-afford-on-40k-a-year
- https://www.nerdwallet.com/article/finance/nerdwallet-budget-calculator
- https://www.fool.com/the-ascent/insurance/auto/articles/should-you-buy-a-new-car-in-2024/
- https://www.cnbc.com/select/when-will-interest-rates-drop/
- https://www.bankrate.com/real-estate/how-much-house-can-i-afford-120k-salary/
- https://www.barrons.com/livecoverage/fed-fomc-meeting-rate-decision-powell-speech-today/card/fed-officials-increase-forecasts-for-level-of-rates-in-2025-2026-UkWWAkV496Sxmqwlt6CN
- https://www.bankrate.com/banking/federal-reserve/economic-indicator-survey-interest-rates-april-2024/
- https://www.ynab.com/blog/ynab-four-rules-less-stress
- https://www.cbsnews.com/news/will-mortgage-rates-ever-fall-to-3-again/
- https://www.jvmlending.com/blog/what-salary-do-you-need-to-afford-a-250000-home/
- https://www.bankrate.com/real-estate/income-needed-for-300k-home/
- https://www.bankrate.com/real-estate/how-much-house-can-i-afford-70k-salary/
- https://www.investopedia.com/terms/h/housepoor.asp
- https://parishlending.com/blog/5000more
- https://www.cnbc.com/select/mortgage-affordability/
- https://www.cnbc.com/2024/03/20/salary-single-person-needs-to-live-comfortably-in-major-us-cities.html
- https://www.ccn.com/analysis/projected-us-interest-rates-in-5-years/
- https://www.cbsnews.com/news/how-far-will-mortgage-rates-fall-when-fed-cuts-rates-what-experts-say/
- https://www.cusocal.org/Learn/Financial-Guidance/Blog/can-you-negotiate-mortgage-rates
- https://www.cnbc.com/2024/03/27/how-much-money-family-of-4-needs-to-live-comfortably-in-us-cities.html
- https://www.pressdemocrat.com/article/news/california-has-the-highest-grocery-prices-in-the-u-s-according-to-helpadv/
- https://www.forbes.com/sites/cicelyjones/2023/10/07/its-okay-to-rent-forever-hitting-your-financial-goals-while-renting/
- https://northsidelegal.com/cash-you-should-have-after-your-down-payment/
- https://www.cbsnews.com/news/how-much-income-do-you-need-to-buy-a-250000-home/
- https://www.lendingtree.com/student/simple-budget/
- https://www.investopedia.com/ask/answers/022916/what-502030-budget-rule.asp
- https://personalfinanceblogs.com/how-much-house-can-i-afford-if-i-make-55000/
- https://worth.com/two-biggest-expenses-relationship-taxes/
- https://www.sofi.com/learn/content/i-make-36k-a-year-how-much-house-can-i-afford/
- https://www.epfcu.org/membership/news-promotions/five-habits-that-can-ruin-your-budget.aspx
- https://www.sofi.com/learn/content/extra-money-after-bills/
- https://www.nerdwallet.com/article/finance/how-to-budget
- https://www.forbes.com/advisor/banking/average-monthly-expenses/
- https://www.nj.com/personal-finance/article/how-much-car-can-i-afford
- https://www.citizensbank.com/learning/50-30-20-budget.aspx
- https://www.rate.com/resources/how-can-i-afford-a-400k-house
- https://www.bankatfirst.com/personal/discover/flourish/why-are-interest-rates-rising.html
- https://www.cnet.com/personal-finance/mortgages/mortgage-rates-go-up-for-homeseekers-mortgage-interest-rates-for-april-16-2024/
- https://themortgagereports.com/22502/how-to-buy-a-home-50000-per-year-income
- https://www.cainmortgageteam.com/how-much-house-can-i-afford-with-a-60k-salary/
- https://dreamhomefinancing.com/income-needed-for-a-400k-mortgage/
- https://corporatefinanceinstitute.com/resources/derivatives/interest-rate-futures/
- https://www.bankrate.com/real-estate/how-much-house-can-i-afford-60k-salary/
- https://www.fdic.gov/consumers/consumer/moneysmart/podcast/documents/borrowing-money-how-much-mortgage-can-i-afford.pdf
- https://www.investopedia.com/articles/pf/05/030905.asp
- https://www.usatoday.com/story/money/2024/01/20/average-grocery-cost-per-week-us-states/72260684007/
- https://www.rocketlawyer.com/real-estate/home-ownership/real-estate-financing/legal-guide/buying-a-house-when-you-have-significant-debt
- https://fxopen.com/blog/en/what-are-uk-interest-rates-predicted-to-be-in-2024-2026/
- https://www.opers.org/financial-wellness/50-20-30-calculator/
- https://www.creditkarma.com/calculators/mortgage/fha-loan
- https://finance.yahoo.com/personal-finance/how-to-save-10000-in-a-year-211127729.html
- https://www.sofi.com/learn/content/i-make-40k-a-year-how-much-house-can-i-afford/
- https://www.cbsnews.com/news/how-much-house-can-i-afford-on-a-50000-salary/
- https://www.sofi.com/learn/content/average-monthly-expenses-for-one-person/
- https://finance.yahoo.com/news/25-best-cities-where-retire-051546942.html
- https://www.chase.com/personal/mortgage/education/financing-a-home/how-much-you-can-afford
- https://www.usbank.com/home-loans/mortgage/conventional-fixed-rate-mortgages/30-year-fixed-mortgage-rates.html
- https://www.sofi.com/learn/content/i-make-65k-a-year-how-much-house-can-i-afford/
- https://www.usatoday.com/money/blueprint/mortgages/what-percent-of-income-should-go-to-mortgage/
- https://www.sofi.com/learn/content/monthly-cost-200000-mortgage/
- https://www.credible.com/mortgage/how-much-house-can-i-afford-50k
- https://www.rocketmortgage.com/learn/what-credit-score-is-needed-to-buy-a-house
- https://finance.yahoo.com/news/dave-ramsey-says-budget-four-180646522.html
- https://money.usnews.com/money/personal-finance/saving-and-budgeting/articles/what-is-the-50-30-20-rule
- https://capitalbankmd.com/homeloans/mortgage-calculators/mortgage-required-income-calculator/
- https://michaelbluejay.com/house/howmuchhome.html
- https://www.sacbee.com/news/california/article284363354.html
- https://finance.yahoo.com/news/chart-day-mortgage-rates-stay-030536086.html
- https://www.investopedia.com/articles/stocks/09/how-interest-rates-affect-markets.asp
- https://www.snagajob.com/salary-calculator?pay=4000&period=month
- https://themortgagereports.com/70827/70k-per-year-salary-how-much-house-can-i-afford
- https://www.forbes.com/advisor/banking/guide-to-50-30-20-budget/
- https://www.snagajob.com/salary-calculator?pay=50000&period=year
- https://www.titlemax.com/discovery-center/how-far-50k-salary-gets-you-by-city/
- https://money.com/how-much-house-can-i-afford/
- https://hiatusapp.com/learn/hiatus-guides/the-most-common-budgeting-mistakes-to-avoid/
- https://www.lowermybills.com/learn/buying-a-home/how-much-house-can-i-afford/
- https://www.rocketmortgage.com/learn/percentage-of-income-for-mortgage
- https://www.sofi.com/learn/content/i-make-80k-a-year-how-much-house-can-i-afford/
- https://www.forbes.com/advisor/mortgages/mortgage-to-income-ratio/
- https://money.com/mortgage-calculator/
- https://www.thebalancemoney.com/how-much-home-can-you-afford-mortgage-rule-of-thumb-1289846
- https://www.bankrate.com/real-estate/new-house-calculator/
- https://personalfinanceblogs.com/is-36000-a-good-salary-for-a-single-person/
- https://www.chase.com/personal/banking/education/budgeting-saving/how-much-income-should-go-to-rent
- https://www.unfcu.org/financial-wellness/50-30-20-rule/