Is buying a home on a single income possible? | Jersey Mortgage Company (2024)

FAQs

Can I get a mortgage with a single income? ›

You can buy a home with a single income, as many borrowers do. Single-income home buyers must meet the same home loan criteria and complete the same application process as dual-income households.

Mortgage lenders often look at gross monthly income to determine how much mortgage you can afford, but it's also important to consider your net income, as well.

The 28% Rule For Mortgage Payments

The often-referenced 28% rule says you shouldn't spend more than 28% of your gross monthly income on your mortgage payment. Gross income is the amount you earn before taxes, retirement account investments and other pretax deductions are taken out.

It is possible to get a mortgage without income, but it will likely be more difficult than getting a mortgage when you do have income. Lenders will also consider other criteria, such as the amount of assets you have.

Using a percentage of your income can help determine how much house you can afford. For example, the 28/36 rule suggests your housing costs should be limited to 28 percent of your total monthly gross income and 36 percent of your total debt.

With a $70,000 annual salary and using a 50% DTI, your home buying budget could potentially afford a house priced between $180,000 to $280,000, depending on your financial situation, credit score, and current market conditions. This range is higher than what you might qualify for with more traditional DTI limits.

The most popular is the 28% rule, which states that no more than 28% of your gross monthly income should be spent on housing costs. Although most personal finance experts recommend the 28% rule, there are several other rules and guidelines that can be helpful in your calculations.

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.

Buying a house as a single person can be a financially-savvy move, but you will need to take steps to protect your hard-earned investment, particularly if you decide to have a roommate or if you get into a serious relationship.

What is a comfortable income for a single person? ›

A house poor person can be considered anyone whose housing expenses account for an exorbitant percentage of their monthly budget. People can find themselves in this situation for a number of reasons. In some cases, a consumer may have underestimated their total costs.

The 50-30-20 budget rule states that you should spend up to 50% of your after-tax income on needs and obligations that you must have or must do. The remaining half should dedicate 20% to savings, leaving 30% to be spent on things you want but don't necessarily need.

General living expenses for a decent living standard vary. It depends on lifestyle and personal preferences. However, to be comfortable you can expect to spend £1,500-£2,000 per month of your net income. This figure includes basic costs such as rent or mortgage payments, utility bills, and council tax.

The borrower must have a 2-year employment history, but only 1 year of income tax return is used to qualify the borrower.

Earmark no more than 30% of your monthly income toward the housing payment. That's it, but it takes some calculation. If the household income is $10,000 a month, say, then the total monthly housing payment should not exceed $3,000.

First, do a quick calculation to get a rough estimate of how much you can afford based on your income alone. Most financial advisors recommend spending no more than 25% to 28% of your monthly income on housing costs.

Income. One of the first things that lenders look at when they consider your loan application is your household income.