The median home sale price as of September is $394,300, according to the National Association of Realtors. But median means half sold for more, and half for less — there are plenty of homes around the country that are selling for around $350,000.
How much do you need to earn to pay for a home that’s $350,000, though? That will depend on a number of factors, including the amount of your down payment and the interest rate of your mortgage. Here’s how to find out the income needed for a $350K house.
Income to afford a $350K house
To figure out how much you need to earn for a $350,000 home purchase, start with the 28/36 rule. This guideline states that you shouldn’t spend more than 28 percent of your gross monthly income on housing costs, and that you shouldn’t spend more than 36 percent on all of your debt combined, including housing.
Bankrate’s mortgage calculator can help you figure out how a $350,000 purchase breaks down. Assuming a 20 percent down payment on a 30-year mortgage at a 7.5 percent interest rate, the monthly principal and interest payments come to $1,957. Don’t forget to include the fees that will vary depending on where you live, like property taxes, homeowners insurance and potential HOA dues. Let’s round that $1,957 up to $2,500 to account for those.
Multiply that monthly payment of $2,500 by 12 and you have an annual housing expense of $30,000. To stay roughly within the 28/36 rule, triple that annual figure to approximate about a third of your income — that means to comfortably afford a $350K home, you’d need to make around $90,000. (However, don’t forget that this calculation does not include your down payment and closing costs, which are paid upfront.)
Since $350,000 is below the national median home price, your options might be slightly more limited than they would be at a higher price point. But where you’re looking to buy makes a huge difference here: Your budget will go a whole lot further in some markets than others. For instance, the median home price in Houston was close to your target price at $328,000 in September, according to Redfin data. In San Diego, though, where it was upwards of $900,000, you won’t get nearly as much for your money.
What factors determine how much you can afford?
Buying a house is an expensive endeavor, and there’s plenty more to consider than just the home’s list price. Besides your annual income, here are other factors that impact how much house you can afford:
- Credit score: A higher credit score helps you qualify for the lowest interest rate available. Even a small difference in rate can save you thousands of dollars over the life of your home loan.
- Down payment: A 20 percent down payment is traditional, but many mortgage products don’t require you to put down that much. However, the more you can put down upfront, the lower your monthly payments will be, and 20 percent will help you avoid having to pay for private mortgage insurance.
- Debt-to-income ratio: Your DTI is how much you owe in debt in relation to how much you earn, expressed as a percentage (think the second number in that 28/36 rule). The lower your DTI, the more likely lenders will be to approve you for a loan.
- Loan-to-value ratio: Similarly, your LTV is a measure of your loan amount in relation to how much the property is worth. Lower is also better for this metric, in the eyes of a lender.
- Potential assistance: A 20 percent down payment can seem like an impossible amount to save — on a $350K house, it comes to $70,000, payable upfront. But luckily, down payment help is available if you qualify, and there are many more programs out there specifically for first-time homebuyers as well. Look into what’s available in your area.
Stay the course until you actually close
An experienced local real estate agent can help you make sure your transaction runs smoothly, from start (finding a home) to finish (closing day). And remember that once you go into contract on a home, you could still have a long time to wait before closing. It’s important, in the meantime, to stay vigilant about your overall financial picture — your mortgage loan isn’t official until it’s official, and you don’t want to make any moves that could cause your lender to reconsider. Avoid anything that could impact or change your credit score in particular, such as applying for new credit cards or making big-ticket purchases (such as a new car). And try not to switch jobs or do anything that could make your finances seem less than stable until the deal is fully done.
FAQs
Your monthly payments will be based not only on the home’s cost, but also the amount of your down payment, your mortgage interest rate and more. For a $350,000 home purchase, if you make a 20 percent down payment on a 30-year mortgage at a 7.5 percent interest rate, the monthly principal and interest payments come to $1,957. That does not include the additional monthly costs of homeowners insurance and property taxes, which will vary depending on the home’s location.
Following the 28/36 rule, a guideline many mortgage lenders use to gauge how much you can afford, you’d likely need to earn at least $90,000 per year to afford a $350,000 house without spreading yourself too thin. Keep in mind that figure does not include upfront payments, like your down payment and closing costs.
FAQs
To stay roughly within the 28/36 rule, triple that annual figure to approximate about a third of your income — that means to comfortably afford a $350K home, you'd need to make around $90,000. (However, don't forget that this calculation does not include your down payment and closing costs, which are paid upfront.)
What should my income be for a 350k house? ›
To afford a $350,000 house, you typically need a combined gross annual income between $87,000 to $110,000, depending on your financial situation, down payment, credit score, and current market conditions. However, this is a general range, and your specific circ*mstances will determine the exact income required.
How much income to afford $300,000 home? ›
To comfortably afford a $300,000 house, you'll likely need an annual income between $75,000 to $95,000, depending on your specific financial situation and the terms of your mortgage. Your gross monthly income is a key factor in determining how much house you can afford.
Can I afford a 300k house on a 70K salary? ›
The house you can afford on a $70K income will likely be between $290,000 to $310,000. Aside from your gross monthly income, lenders look at your credit report, down payment, monthly debt payments (including car payments and personal loans), and your estimated mortgage rate, among other things.
What is the monthly payment on a 350k mortgage? ›
With a 30-year loan term and 7% interest rate, borrowers can expect to pay around $2,328 a month. Whereas a 15-year term at the same rate would have a monthly payment of approximately $3,146. However, these estimates only account for the loan principal and interest.
Can I afford a 350k house making 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.
How much is a 20% down payment on a $350 000 house? ›
To make a 20% down payment on a property with a $350,000 mortgage, you would need $87,500. Many buyers make lower down payments, however.
How much do I need to make to buy a 350k house in FHA? ›
Following the 28/36 rule, a guideline many mortgage lenders use to gauge how much you can afford, you'd likely need to earn at least $90,000 per year to afford a $350,000 house without spreading yourself too thin. Keep in mind that figure does not include upfront payments, like your down payment and closing costs.
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.
Can I buy a house with a 40k salary? ›
On a $40,000 salary, you could potentially afford a house worth between $100,000 to $140,000, depending on your specific financial situation and local market conditions. While this may limit your options in many urban areas, there are still markets where homeownership is achievable at this income level.
What credit score is needed to buy a $300K house? The required credit score to buy a $300K house typically ranges from 580 to 720 or higher, depending on the type of loan. For an FHA loan, the minimum credit score is usually around 580.
What credit score is needed to buy a house? ›
Credit score and mortgages
The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).
How much is the Monthly payment on a 300K mortgage? ›
The monthly payment on a $300,000 mortgage depends on what interest rate you get and the term you choose. On a 30-year loan at a 7% rate, it would be $1,996 per month toward your principal and interest. Keep in mind that you also have to pay for expenses such as homeowners insurance and property taxes each month.
What happens if I pay an extra $200 a month on my mortgage? ›
If you pay $200 extra a month towards principal, you can cut your loan term by more than 8 years and reduce the interest paid by more than $44,000. Another way to pay down your mortgage in less time is to make half-monthly payments every 2 weeks, instead of 1 full monthly payment.
How much income for a 300k mortgage? ›
How Much Income Do You Need to Buy a $300,000 House? With a 5% down payment and an interest rate of 7.158% (the average at the time of writing), you will want to earn at least $6,644 per month – $79,728 per year – to buy a $300,000 house. This is based on an estimated monthly mortgage payment of $2,392.
How much is a mortgage per month on 350000? ›
To give average figures, the repayments on a £350,000 mortgage should be around £1,847 per month and £554,229 overall across the entire term. This is based on the average interest rate at the time of writing (September 2024) being 4% and typical term lengths set at 25 years.
Is $350000 a good household income? ›
Is Earning $350,000 A Year Considered Rich? At $350,000 a year, you're living a upper middle class lifestyle in an expensive coastal city. In a heartland or southern city, earning $350,000 a year is considered rich.
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.
How much house on 100k salary? ›
While your income is a solid starting point, lenders also scrutinize your debt-to-income ratio, credit score, and other financial obligations. With a $100k salary in today's market, you could qualify for a mortgage between $250,000 and $350,000. Remember, this is just an estimate.
How much house can I afford if I make $160000 a year? ›
With a $160,000 annual salary, you could potentially afford a house priced between $480,000 to $950,000, depending on your financial situation, credit score, and current market conditions. For homes priced above $766,550 (the 2024 conforming loan limit), you'll likely need to consider a jumbo loan.
