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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.

These numbers change—sometimes dramatically—depending on a few factors, including:

•   How much debt you have

•   What your down payment is

•   How much you’re paying for taxes, insurance, and homeowners association dues, if anything

•   What interest rate is available to you

•   What type of loan you get

With the median home price in the U.S. topping $400,000, you might be wondering how everyone else affords a home in your neighborhood. We’ll cover every aspect of home affordability for a $45,000 salary to help you work toward getting the home you’ve always wanted.


💡 Quick Tip: A VA loan can make home buying simple for qualified borrowers. Because the VA guarantees a portion of the loan, you could skip a down payment. Plus, you could qualify for lower interest rates, enjoy lower closing costs, and even bypass mortgage insurance.†

What Kind of House Can I Afford With $45K a Year?

The kind of home you can afford depends on more than your $45,000 salary. It’s also based on your debt-to-income (DTI) ratio, interest rate, down payment, type of home loan, and lender.

Understanding Debt-to-income Ratio

Your DTI ratio is a key factor in determining how much home you can afford. The more debt you have, the lower your housing payment needs to be. This directly translates into a lower priced home. So, what exactly is a DTI ratio? It is the proportion of monthly debt you need to repay in relation to your gross monthly income.

For example, if your total debt amounts are $2,000 each month and your income is $6,000 per month, your debt-to-income ratio would be 33%. This falls under the 36% threshold mortgage lenders look for with conventional home mortgage loans.

However, keep in mind that the $2,000 has to include your new mortgage payment. If your debts cost $500 each month, your monthly mortgage payment cannot be more than $1,500.

How to Factor in Your Down Payment

Your down payment also plays a significant factor in home affordability. Generally, the higher down payment you have, the more home you can afford. If you purchase a home far below what you can afford, your monthly payment will be much lower.

If you make a down payment of 20% or more, you’ll also be able to save on mortgage insurance premiums, which are typically required on most loan types for homes purchased with a down payment lower than 20%.

If you play around with a mortgage calculator, you can see how a larger down payment can affect your monthly payment and home price.

Factors That Affect Home Affordability

Beyond your debt, income, and down payment, there are a number of other factors that go into home affordability. These include:

•   Interest rates The interest rate you have on your home dramatically impacts how much home you can afford. When interest rates are high, your monthly payment is higher. When interest rates are down, you pay less interest on your loan, which means you can afford a more costly home. Remember that if rates drop significantly a mortgage refinance is always an option.

•   Credit history and score The interest rate that you’ll qualify for is dependent on your credit score and history. A better credit score will qualify you for the best interest rates, which means your monthly payment will be lower, which can increase your buying power.

•   Taxes and insurance Taxes and insurance factor into your home’s monthly payment. They will be calculated into the home’s PITI (payment, interest, taxes, insurance) and included as part of your monthly debts.

•   Loan type The type of loan you get affects home affordability. This is due to the different interest rates and down payment options available to specific loan types. VA loans from the U.S. Department of Veterans Affairs, for example, come with a lower interest rate and don’t require a down payment.

•   Lender Lenders may have discretion to increase the allowable debt-to-income ratio. Some can go as high as 50%.

•   Location Some areas are more affordable than others. Thinking about moving? Take a look at a list of the best affordable places to live in the U.S.

Recommended: The Cost of Living By State

How to Afford More House With Down Payment Assistance

One of the best tools for increasing home affordability is with down payment assistance programs. These programs provide funds for the down payment (and sometimes closing costs) to help make homes more affordable for buyers.

Some programs offer down payment assistance in the form of a grant that does not need to be repaid, while others finance a second mortgage which may need to be paid when the home is sold (but sometimes is forgiven earlier). In Colorado, for example, there’s the CHFA Colorado Down Payment Assistance Grant. Virginia offers the Virginia HOMEownership Down Payment and Closing Cost Assistance program (DPA)

Search your state, county, and city to see what programs are offered for your area. You may also want to read tips to qualify for a mortgage.

How to Calculate How Much House You Can Afford

Calculating how much house you can afford is smart, especially if you’re a first-time homebuyer and making early plans to buy a home. There are some guidelines lenders use to qualify borrowers for a mortgage, including:

The 28/36 Rule: This guideline states that no more than 28% of your income should go to your monthly housing payment and your debt-to-income ratio should be no more than 36% of your income

When calculating DTI (also known as the back-end ratio), your lender will add all of your debts (including the new mortgage payment) to make sure all debts will fall under 36% of your income amount. If your monthly income is $3,750 ($45,000/12 = $3,750), your debts (including the mortgage payment) should be no more than $1,350 ($3,750*.36).

Lenders will also calculate the front-end ratio, which should be no more than 28% or your income. With a monthly income of $3,750, this number works out to $1,050.

The 35/45 Rule: Some lenders may go by the 35/45 guideline, which allows for a housing payment up to 35% of income and 45% of total DTI ratio. This expanded allowance is up to the lender, but may allow for qualification of higher purchase amount and payment.

With a monthly income of $3,750, the housing allowance (35% of your income) increases to $1,312.50 and the total monthly debts (45% of your income) increases to $1,687.50. An easier way to calculate how much home you can afford is with a home affordability calculator.

Home Affordability Examples

Let’s take a look at two examples of homebuyers with $45,000 incomes in differing scenarios. All assume the same taxes ($2,500), insurance ($1,000), and APR (6%) for a 30-year loan term (just for illustrative purposes).

The $45,000 annual salary is divided by 12 to get a $3,750 monthly income and the maximum DTI ratio works out to be $1,350 ($3,750 * .36).

Example #1: $45,000 income but lots of debt
Monthly credit card debt: $300
Monthly car payment: $350
Student loan payment: $300
Total debt = $950 total debt payments

Down payment = $20,000
Maximum DTI ratio = $3,750 * .36 = $1,350
Maximum mortgage payment = $400 ($1,350 – $950)

Home budget = $38,069

Even with a $20,000 down payment, it could be hard to buy a home in this scenario.

Example #2: $45,000 income with little debt
Monthly credit card debt: $50
Monthly car payment: $0
Student loan payment: $0
Total debt = $50

Down payment: $20,000
Maximum DTI ratio = $3,750 * .36 = $1,350
Maximum mortgage payment = $1,300 ($1,350 – $50)

Home budget = $171,925

💡 Quick Tip: Don’t have a lot of cash on hand for a down payment? The minimum down payment for an FHA mortgage loan is as low as 3.5%.1

How Your Monthly Payment Affects Your Price Range

The monthly payment you qualify for affects the total price you can pay for a home. If monthly debts are too high, for example, you’ll likely qualify for a lower-priced home. The monthly payment is also affected by interest rates. Because interest is amortized over 30 years (on a 30-year mortgage), the amount of interest you pay is significant, even if you manage to score a lower rate.

Recommended: Home Loan Help Center

Types of Home Loans Available to $45K Households

When you’re looking for home loans, you’ll see these different types of mortgage loans available:

•   FHA loans Loans backed by the Federal Housing Administration are geared toward buyers with low down payments, low credit scores, and other situations that require a lender to be more flexible.

•   USDA loans United States Department of Agriculture loans are for those who live in rural areas. They offer zero down payment options and low interest rates.

•   Conventional loans Conventional loans are loans that are not part of a government program, but they are backed by government-sponsored enterprises, Fannie Mae and Freddie Mac. They’re usually less expensive than FHA loans, but your application does need to meet certain guidelines to qualify for conventional financing.

•   VA loans VA loans offer zero down payment options, the lowest interest rates on the market, and flexible credit requirements. If you qualify for a VA loan, you’ll likely want to go with this option.

The Takeaway

There’s no way around it — affording a home in today’s housing market is tough. If your $45,000 salary is all you have access to, you’ll need to save, improve your credit, research down payment assistance programs, enlist a partner, move to a less expensive area, or find other creative ways to afford a home. But don’t give up. It can be done. Your hard work will pay off with a mortgage for a home of your own soon.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Is $45K a good salary for a single person?

A $45,000 salary for a single person is a good start. How good it feels to earn $45,000 will depend on the cost of living where you live and the friends and neighbors you’re surrounded by.

What is a comfortable income for a single person?

A comfortable income for a single person depends on your lifestyle and habits. The median income for a single person is $56,929, according to data from the U.S. Census. A single person in Cobb County, Georgia, would be able to cover their expenses for about $40,000 per year while the same person in New York City would need $53,342.

What is a liveable wage in 2023?

The Massachusetts Institute of Technology’s Living Wage Calculator takes into account your area, working household members, and number of children. For example, a single living in San Francisco has a living wage of $26.63. A household with three children where only one spouse works in St. George, Utah has a living wage of $44.99 per hour.

What salary is considered rich for a single person?

To be in the top 5% of earners, you would need a salary north of $234,342.

Photo credit: iStock/500

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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An income of $200,000 a year puts you in a good position to afford a home priced at $600,000. But whether you should aim higher or lower than this in your house hunt will depend on your debt, how much you’ve saved for a down payment, and current interest rates, among other factors. Read on for a breakdown of the variables that could affect how much of a mortgage you can manage.

What Kind of House Can I Afford with $200,000 a Year?

Not so very long ago, if you’d asked someone: “If I make $200,000 a year, how much house can I afford?” they probably would have said, “A mansion!” Of course, that isn’t necessarily true anymore. But that income still can get you a pretty sweet home in most places.

You can get an idea of how much house you can afford on a $200,000 income by using an online mortgage calculator or by prequalifying with one or more lenders for a home mortgage loan. Or you can run the numbers yourself using a calculation like the 28/36 rule, which says your mortgage payment shouldn’t be more than 28% of your monthly gross income, and your total monthly debt — including your mortgage payment — shouldn’t be more than 36% of your income. Let’s take a closer look at what could affect how much you can borrow and what your payments might be.


💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

Understanding Debt-to-Income Ratio

You can expect lenders to look carefully at your debt-to-income ratio (DTI) — the second number in the 28/36 rule — when they’re deciding how much mortgage you can afford. It tells them how you’re handling the debt you already have and if you can manage more.

Your DTI ratio is calculated by dividing your total monthly debt payments by your monthly gross income. Mortgage lenders generally look for a DTI ratio of 36% or less; but depending on the lender and the type of home loan you’re hoping to get, you may be able to qualify with a DTI up to 43% or even 50%.

Typically, the lower your risk, the better your borrowing options. So if you want the best loan amount, rate, and terms, you’ll want to keep an eye on this number.

Your Down Payment Also Can Affect Costs

You may not need a hefty down payment to qualify for some home loans. But the more you can comfortably put down on a house, the less you’ll have to borrow, which can help lower your monthly payments. And if you put down at least 20%, you can avoid paying private mortgage insurance (PMI), which will further reduce your payments.

Other Factors that Can Affect Home Affordability

Your income, debt, and down payment are all primary factors in determining how much house you can afford. But there are other things that also can affect your ability to qualify for a mortgage that’s manageable, including:

Interest Rates

A lower mortgage interest rate can significantly lower your monthly payment — and the amount you’ll pay for your home over time. While interest rates are relatively consistent across the market, lenders do compete for customers, so you may benefit from shopping around. You also can help your chances of qualifying for a better rate by making sure your finances are in good shape and you have a solid credit score.

Loan Term

The most common mortgage term is 30 years, but different loan lengths are available depending on the type of mortgage you choose — and each has pros and cons. If you’re deciding between a 15-year vs. a 30-year mortgage, for example, the shorter term may offer a less expensive interest rate, which could save you money over the life of your loan. But the 30-year term will likely have lower monthly payments, which may be a better fit for your budget.

Homeowners Insurance

Understanding how to buy homeowners insurance and comparing the policies available may help you minimize this expense. Lenders require borrowers to have an adequate amount of homeowners insurance, and if you live in a state that’s considered “high risk,” the cost of coverage could be significant.

HOA Fees

If you’re buying in a community with lots of amenities, homeowners association (HOA) dues could add a substantial amount to your monthly home costs. (The monthly average is about $250, but fees can go as high as $2,500 or more.)

Property Taxes

Property taxes, which are generally based on the assessed value of a home, are often included in a borrower’s monthly mortgage payment, so it’s important to include this amount when you calculate home affordability. (Check your county’s website for the correct number.)

Location

If you’re a fan of real estate shows like House Hunters, you already know the city or even the particular neighborhood you want to live in can be a big factor in determining how much house you can afford. The overall cost of living can vary by state, and costs are also typically higher in cities vs. rural areas. If you aren’t willing to compromise on location, you may have to increase your housing budget to buy in the area you want.

Recommended: Best Affordable Places to Live in the U.S.

How to Afford More House with Down Payment Assistance

If you have the means to manage a higher monthly payment but you need some help with your down payment, there are state and federal down payment assistance programs that can help.

Many programs set limits on how much an eligible home can cost, or on the homebuyer’s income. But it’s worth checking out what’s available to you — especially if you live in a state with higher home values. In California, for example, where homes can be expensive, a first-time homebuyer with a $200,000 income still can qualify for assistance in some counties.

Home Affordability Examples

With a home affordability calculator, you can get a basic idea of how much house you can afford by plugging in some basic information about your income, savings, debt, and the home you hope to buy. Here are some hypothetical examples:

Example #1: Saver with a Little Debt

Annual income: $200,000

Amount available for down payment: $80,000

Monthly debt: $650

Mortgage rate: 6.5%

Property tax rate: 1.125%

House budget: $700,000

Example #2: Less Debt, But Also Less Savings

Gross annual income: $200,000

Amount available for down payment: $20,000

Monthly debt: $200

Mortgage rate: 6.5

Property tax rate: 1.125%

House budget: $605,000

How You Can Calculate How Much House You Can Afford

Along with using an online calculator to figure out how much house you might be able to afford on a $200,000 income, you also can run the numbers on your own. Some different calculations include:

The 28/36 Rule

We already covered the 28/36 rule, which combines two factors that lenders typically look at to determine home affordability: income and debt. The first number sets a limit of 28% of gross income as a homebuyer’s maximum total mortgage payment, including principal, interest, taxes, and insurance. The second number limits the mortgage payment plus any other debts to no more than 36% of gross income.

Here’s an example: If your gross annual income is $200,000, that’s $16,666 per month. So with the 28/36 rule, you could aim for a monthly mortgage payment of about $4,666—as long as your total debt (including car payments, credit cards, etc.) isn’t more than $6,000.

The 35/45 Model

Another DIY calculation is the 35/45 method, which recommends spending no more than 35% of your gross income on your mortgage and debt, and no more than 45% of your after-tax income on your mortgage and debt.

Here’s an example: Let’s say your gross monthly income is $16,666 and your after-tax income is about $13,000. In this scenario, you might spend between $5,833 and $5,850 per month on your debt payments and mortgage combined. This calculation gives you a bit more breathing room with your mortgage payment, as long as you aren’t carrying too much debt.

The 25% After-Tax Rule

If you’re worried about overspending, or you have other goals you’re working toward, this method will give you a more conservative result. With this calculation, your target is to spend no more than 25% of your after-tax income on your mortgage. Let’s say you make $13,000 a month after taxes. With this method, you would plan to spend $3,250 on your mortgage payments.

Keep in mind that these equations can only give you a rough idea of how much you can spend. When you want to be more certain about the overall price tag and monthly payments you can afford, it helps to go through the mortgage preapproval process.

Recommended: 2024 Home Loan Help Center

How Your Monthly Payment Affects Affordability

Some eager homebuyers can tend to put most of their focus on a home’s listing price or the interest rate. But it’s how those factors and others combine to raise or lower the monthly payment that can ultimately determine whether a buyer can afford the home or not.

Before signing on the dotted line, it’s a good idea to run the numbers on an online mortgage calculator to be confident you can stay on track.

If you do find yourself struggling a bit — perhaps because your income changes or an unexpected life event occurs — refinancing to a new loan with a lower payment may be an option. (Especially if interest rates drop.) But how soon you can refinance may depend on the type of loan you have.

Types of Home Loans Available to $200,000 Households

A $200,000 income can go a long way toward helping a buyer qualify for certain mortgage options, such as a conventional or jumbo loan. But a higher salary also could make you ineligible for a government-backed loan that has income limits. There also may be limits on the purchase price and type of property, depending on the mortgage you get.

Here are a few of the options that may be available to $200,000-income households:

Conventional Loans This loan is issued by a private lender, such as a bank, credit union, or other financial institution.

FHA loans Insured by the Federal Housing Administration, FHA loans are a good resource for borrowers with a lower credit score or little money available for a down payment. There are no limits on how much you can earn and get an FHA loan, but there may be a limit on how much you can borrow depending on where you plan to reside.

VA loans A loan guaranteed by the U.S. Department of Veterans Affairs is an excellent option for eligible members of the U.S. military and surviving spouses. There are no income limits on VA loans, and there are no longer standard loan limits on VA direct or VA-backed home loans.

USDA loans These loans are guaranteed by the U.S. Department of Agriculture and are meant to help moderate- to low-income borrowers buy homes in eligible (typically rural) areas. Loan limits and income limits are based on the home’s location.


💡 Quick Tip: Keep in mind that FHA home loans are available for your primary residence only. Investment properties and vacation homes are not eligible.

The Takeaway

There are several variables that factor into how much home you can afford. Besides your income, lenders will look at your credit, your debt, and your down payment to determine how much you can borrow. To find a loan and monthly payment that’s a good fit for you, it’s a good idea to research and compare different loan types and amounts. And, if you have questions, you can seek advice from a qualified mortgage professional.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Is $200,000 a good salary for a single person?

According to the Census Bureau, only 11.5% of U.S. households earned $200,000 or more in 2022. So, if you’re earning $200,000 all on your own, you could say you’re doing pretty well.

What is a comfortable income for a single person?

“Comfortable” is a subjective term and can vary from one person to the next. For some people comfortable means being able to buy what they want. For others it means crafting and following a careful budget so that they know where their money is going each month.

What is a livable wage in 2024?

The Massachusetts Institute of Technology’s Living Wage Calculator lists living costs across the U.S., and its “livable wage” varies widely based on family size and location. For a single person with no children in Napa County, California, for instance, the living wage is $21.62 per hour. In Boone County, Nebraska, it’s $14.93 per hour.

What salary is considered rich for a single person?

The top 5% of earners made, on average, $335,891 in 2021, the most recent year for which data is available, according to the Economic Policy Institute. (If you feel as though you have to be in the top 1% to be “rich,” you’d have to earn $819,324 or more.)

Photo credit: iStock/YvanDube

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
^†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.

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Earning $90,000 a year puts you in a good position to afford a home priced at around $350,000, as long as you don’t already have significant other debts to pay. That’s good news considering the U.S. average home value these days is just above $342,000. But there are many variables in play that could adjust your budget up or down. Let’s examine them to get closer to your personal housing budget number.

What Kind of House Can I Afford With $90K a Year?

Congratulations! At $90,000 a year, your salary is almost $15,000 higher than the American median household income. It makes sense that you’ve set your sights on homeownership. Making $90,000 per year may feel like a lot of money … or not so much, depending on whether you live in an affordable place. The question is less about how much house you can afford than how much you can afford to spend on housing each month.

There’s a basic rule of thumb that you should spend no more than a third of your gross income (i.e., income before taxes) on housing. (Ideally, you’d spend closer to about a quarter.) So someone earning $90,000 per year, can reasonably afford to spend between $22,500 and $29,700 on housing each year — which translates to between $1,875 and $2,475 per month.

That’s a substantial enough chunk of change to cover many mortgage payments. For example, if you took out a home mortgage loan of $310,000 at an interest rate of 7%, your monthly payment might be around $2,060, which falls into your affordable range. (This assumes you make a down payment of $40,000 on a home priced at $350,000.)

However, more factors than your income affect what size loan mortgage lenders will qualify you for — and more factors than the price of the house itself affect whether or not you can afford it.


💡 Quick Tip: You deserve a more zen mortgage loan. When you buy a home, SoFi offers a guarantee that your loan will close on time. Backed by a $5,000 credit.‡

What is Debt-to-Income Ratio (DTI) — and Why Does It Matter?

Let’s take a second to talk about DTI, or debt-to-income ratio. Your DTI is, as its name suggests, a ratio of how much debt you currently have to how much income you make. It’s calculated by dividing your debts by your gross monthly income, and it’s one of the factors lenders consider when qualifying you for a home loan.

If you’re in a lot of debt — meaning your DTI is higher — it may be harder for you to qualify for a mortgage, no matter how much money you make. Inversely, if your DTI is lower, that’s a favorable mark even if you’re not making huge amounts of money.

Consider how much debt you currently carry before applying for a home loan. If you’re already paying off a car, student loan, credit card balance or all of the above, you may want to work on dialing down your debt; even if you qualify for a mortgage, your interest rate might be higher as a result.

Factoring in Your Down Payment

Along with your DTI and income, mortgage lenders also consider how much money you’re able to pay toward a home up front — otherwise known as your down payment. Although a larger down payment might not significantly shift your monthly payment, it can have an effect on the amount a lender is willing to offer you. (Having a significant amount of money available for a down payment can be a favorable marker for lenders.)

That said, it can take a long time to save up a substantial down payment, even for those earning good income — and you may be sacrificing the opportunity to build equity in the short term if you wait to buy a house.

In any case, remember that responsible homeownership will require a well-set savings habit. (After all, your new home is going to need repairs—and you won’t be able to just call your landlord anymore!)

How to Afford More House With Down Payment Assistance

For many would-be homebuyers — especially first-time homebuyers — the process of saving a downpayment is the single largest obstacle to owning a home. Fortunately, down payment assistance programs offer one way for buyers to give themselves a leg up. Offered through government agencies and nonprofits, down payment assistance programs offer very-low-cost loans or grants that can amplify whatever you’ve already saved up for a down payment.

There are often requirements in order to qualify, such as not out-earning a certain income threshold or having less than a given amount of liquid assets available. Still, these programs can bridge the gap for many first-time buyers trying to leap the down-payment hurdle into homeownership.

Other Factors That Affect Your Ability to Afford a Home

Along with your DTI, the size of your down payment, and the size of the loan you’re hoping to take out, your credit score — and credit history in general — has an impact on your housing budget. Even if you earn good money, a poor credit score may keep you from qualifying for a mortgage, and a score that is fair but not great may push your interest rate higher than it would otherwise be.

Additionally, lenders are interested not only in how much you make, but the stability of your capacity to earn that money. That means they’ll consider not only your job, but how long you’ve had it; most like to see a steady job history of two years. That said, it may still be possible to qualify for a home loan if your job is new to you if you’ve had consistent income over that time, especially if your other markers are favorable.

How to Calculate How Much House You Can Afford

To get the best sense of how much you can afford, consider trying an online mortgage calculator, or home affordability calculator, which will allow you to plug in all of your specific metrics and see how much of a mortgage you’re likely to qualify for (and the size of the associated monthly payment). Keep in mind that your mortgage is just the start. When you buy a house, you’ll also be responsible for any maintenance and upkeep, not to mention property taxes, utility costs, furnishings, and more.

Speaking to a lender is another great way to understand in depth how much house you’re likely to be able to afford based on their algorithm and your specific financial standing.


💡 Quick Tip: A VA loan can make home buying simple for qualified borrowers. Because the VA guarantees a portion of the loan, you could skip a down payment. Plus, you could qualify for lower interest rates, enjoy lower closing costs, and even bypass mortgage insurance.†

Home Affordability Examples

Let’s say you earn $90,000 per year and are interested in buying a house that costs $400,000. You’ve saved up $30,000 for a down payment (7.5% of the purchase price of this home), and you have a credit score of 750.

With interest rates around 7%, as they’ve been lately, your monthly payment for such a home would likely be at or above $3,200—in part because, if your down payment is less than 20%, you’ll need to pay for mortgage insurance, which is an additional monthly cost. That’s substantially more than a third of your gross income at $90,000, so it’s probably not a good idea.

So let’s say you take your $30,000 down payment and look at a significantly cheaper home, perhaps in a significantly cheaper state. This one costs $250,000. In that case, with everything else the same, you’d likely pay less than $2,000 per month, which is a comfortable amount for your income level.

Remember that if your credit score and income trend upward after you purchase a home, and you want to improve your mortgage loan terms, you can always look into a mortgage refinance.

How Your Monthly Payment Affects Your Price Range

As you can see, your monthly payment has a huge effect on the price range of the home you’re comfortably able to afford. Although $90,000 per year may seem like a lot of income (and is, at a national level), it may not translate to being able to afford a very large or costly home.

Types of Home Loans Available to Households with $90,000 in Income

Good news: There are many different types of mortgage loans available to those who earn $90,000. Along with conventional loans from private lenders, you may also be eligible for government-subsidized loans like VA loans, FHA loans, or USDA loans, all of which can lower the qualifying requirements and make the home loan process easier for first-time homebuyers.

The Takeaway

Although $90,000 is a large income, especially for a single person, it doesn’t translate to an unlimited home-buying budget. Aside from income, your credit history, DTI, and available down payment amount also have a significant impact on how much mortgage lenders will be willing to offer you.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

FAQ

Is $90K a good salary for a single person?

A salary of $90,000 is substantially higher than the national median household income, so yes, it’s a good salary for a single person. Exactly how good depends on where you live, as the cost of living varies significantly across the U.S.

What is a comfortable income for a single person?

“Comfortable” is relative! While one person may be comfortable sharing a home with multiple roommates, others might require more space or greater luxuries to feel satisfied. Personal finance is just that—personal—and only you can decide how much income you need to be truly comfortable.

What is a liveable wage in 2024?

The living wage changes substantially based on the cost of living where you live. For example, according to the MIT Living Wage Calculator, $14.54 per hour is a living wage for a single adult with no children in Pocatello, Idaho, but that figure goes up to $21.58 in Portland, Oregon.

What salary is considered rich for a single person?

While “rich” is relative, the top 5% of people in America earned more than $335,000 in 2021 according to a study by the Economic Policy Institute. However, depending on where you live, $90,000 may feel rich — or not. Cost of living has a major impact.

Photo credit: iStock/andreswd

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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.

^‡SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will give you a credit toward closing costs or additional expenses caused by the delay in closing of up to $10,000.^ The following terms and conditions apply. This Guarantee is available only for loan applications submitted after 04/01/2024. Please discuss terms of this Guarantee with your loan officer. The mortgage must be a purchase transaction that is approved and funded by SoFi. This Guarantee does not apply to loans to purchase bank-owned properties or short-sale transactions. To qualify for the Guarantee, you must: (1) Sign up for access to SoFi’s online portal and upload all requested documents, (2) Submit documents requested by SoFi within 5 business days of the initial request and all additional doc requests within 2 business days (3) Submit an executed purchase contract on an eligible property with the closing date at least 25 calendar days from the receipt of executed Intent to Proceed and receipt of credit card deposit for an appraisal (30 days for VA loans; 40 days for Jumbo loans), (4) Lock your loan rate and satisfy all loan requirements and conditions at least 5 business days prior to your closing date as confirmed with your loan officer, and (5) Pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. This Guarantee will not be paid if any delays to closing are attributable to: a) the borrower(s), a third party, the seller or any other factors outside of SoFi control; b) if the information provided by the borrower(s) on the loan application could not be verified or was inaccurate or insufficient; c) attempting to fulfill federal/state regulatory requirements and/or agency guidelines; d) or the closing date is missed due to acts of God outside the control of SoFi. SoFi may change or terminate this offer at any time without notice to you. *To redeem the Guarantee if conditions met, see documentation provided by loan officer.
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^¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.