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If you’re contemplating a job change or angling for a salary increase, you may have questions about whether a $95,000 salary will sustain you. Consider that the typical worker in the U.S. earns around $63,795 a year, according to the Social Security Administration. A $95,000 annual paycheck is nearly 49% higher than that.

Let’s see where you’d fall on the earnings spectrum compared to others in the U.S. and also explore ways to budget a $95,000 annual salary.

Is $95K a Good Salary?

While not quite a six-figure salary, $95K is generally considered a good income for a single person. But whether that amount works for you depends largely on where you live and your personal standards. For example, you may find that a $95,000 salary goes further in Des Moines than Honolulu, which has a higher cost of living.

No matter where you live, a budget planner app can help you set customized budgets and categorize spending, so you can make the most of your income.

Recommended: Average Salary in the U.S.

Average Median Income in the US by State in 2024

As in real estate, location is an important factor when it comes to salaries. Wages for the same job can vary widely from one state to another, driven largely by differing costs of living.

Here’s a look at the median household income in each state, per U.S. Census Bureau data.

State	Median Household Income
Alabama	$59,609
Alaska	$86,370
Arizona	$72,581
Arkansas	$56,335
California	$91,905
Colorado	$87,598
Connecticut	$90,213
Delaware	$79,325
Florida	$67,917
Georgia	$71,355
Hawaii	$94,814
Idaho	$70,214
Illinois	$78,433
Indiana	$67,173
Iowa	$70,571
Kansas	$69,747
Kentucky	$60,183
Louisiana	$57,852
Maine	$68,251
Maryland	$98,461
Massachusetts	$96,505
Michigan	$68,505
Minnesota	$84,313
Mississippi	$52,985
Missouri	$65,920
Montana	$66,341
Nebraska	$71,772
Nevada	$71,646
New Hampshire	$90,845
New Jersey	$97,126
New Mexico	$58,722
New York	$81,386
North Carolina	$66,186
North Dakota	$73,959
Ohio	$66,990
Oklahoma	$61,364
Oregon	$76,362
Pennsylvania	$73,170
Rhode Island	$81,370
South Carolina	$63,623
South Dakota	$69,457
Tennessee	$64,035
Texas	$73,035
Utah	$86,833
Vermont	$74,014
Virginia	$87,249
Washington	$90,325
West Virginia	$55,217
Wisconsin	$72,458
Wyoming	$72,495

Recommended: Highest Paying Jobs by State

Average Cost of Living in the US by State in 2024

How much you pay for necessities like housing, transportation, health care, and food can impact just how far your $95,000 salary will go. When figuring out whether $95,000 is a good salary for a single person, it can help to look at how much people in different states are spending on housing, food, health care, and other basics. The U.S. Bureau of Economic Analysis’ (BEA) list of personal consumption expenditures, below, compiles this information.

State	Personal Consumption Expenditure
Alabama	$42,391
Alaska	$59,179
Arizona	$50,123
Arkansas	$42,245
California	$60,272
Colorado	$59,371
Connecticut	$60,413
Delaware	$54,532
Florida	$55,516
Georgia	$47,406
Hawaii	$54,655
Idaho	$43,508
Illinois	$54,341
Indiana	$46,579
Iowa	$45,455
Kansas	$46,069
Kentucky	$44,193
Louisiana	$45,178
Maine	$55,789
Maryland	$52,651
Massachusetts	$64,214
Michigan	$49,482
Minnesota	$52,849
Mississippi	$39,678
Missouri	$48,613
Montana	$51,913
Nebraska	$37,519
Nevada	$49,522
New Hampshire	$60,828
New Jersey	$60,082
New Mexico	$43,336
New York	$58,571
North Carolina	$47,834
North Dakota	$52,631
Ohio	$47,768
Oklahoma	$42,046
Oregon	$52,159
Pennsylvania	$53,703
Rhode Island	$52,820
South Carolina	$46,220
South Dakota	$48,997
Tennessee	$46,280
Texas	$49,082
Utah	$48,189
Vermont	$55,743
Virginia	$52,057
Washington	$56,567
West Virginia	$44,460
Wisconsin	$49,284
Wyoming	$52,403

Recommended: Average Income by Age

How to Budget for a $95K Salary

No matter how much money you earn each year, it’s a smart idea to create a budget. One of the first steps you’ll want to take is to figure out how much money you have left after withholding for federal income taxes, Social Security taxes, and Medicare. On average, the take-home pay on a $95,000 salary is around $74,991.50, though that doesn’t include state taxes.

Once you’ve determined your after-tax income, consider using the 50/30/20 rule for budgeting. This means 50% of your income goes toward needs, 30% goes toward “wants,” and 20% goes toward savings or debt repayment beyond your minimum amounts.

Let’s say, for example, you live in Massachusetts. Your $95,000 salary would break down to $5,757 per month due to taxes (based on a 27.3% average tax rate and 35% marginal tax rate). Using the 50/30/20 rule, you’d put the following amounts in the corresponding pockets:

•   50% needs: $2,878.50

•   30% wants: $1,727.10

•   20% savings or debt repayment: $1,151.40

After you have your budget in place, a tool like an online money tracker can help you monitor your spending as well as keep tabs on your credit score.

Maximizing a $95K Salary

Whether you’re earning $95,000 as an entry-level salary or after several years on the job, there are ways to make the most of your income. Here are some strategies to consider:

•   Build an emergency fund. Aim for a cushion of three to six months of living expenses.

•   Max out your retirement savings account — and make sure you’re taking advantage of a company match, if one is available.

•   Explore investing in securities that charge minimal fees.

•   Work on improving your credit score, which can boost your chances of getting competitive interest rates.

Quality of Life with a $95K Salary

While it’s a highly subjective measure, “quality of life” typically refers to a combination of personal preferences, including job satisfaction, family life, health, and safety. How well you can live on your salary often boils down to your expenses and how and where you choose to spend your money.

By and large, many people with $95,000 salaries find they can live quite comfortably. However, if you spend more than you earn or rely on credit to fund your lifestyle, you may find you have trouble making ends meet on your income.

Is $95,000 a Year Considered Rich?

The Charles Schwab Wealth Survey reported that a national sample of Americans between the ages of 21 to 75 believe you need to amass $2.2 million to be considered wealthy. However, according to the same survey, Americans who say they feel wealthy have less than that — around a $560,000 net worth.

Note that it’s possible to accumulate wealth if you’re earning $95,000 a year, though it may take some time. Common strategies include relying on investing and compound interest to increase net worth, saving money, and setting money aside in a company retirement plan.

Recommended: Net Worth Calculator By Age

Is $95K a Year Considered Middle Class?

Middle class is defined as income that is two-thirds to double the national median income. By that definition, a middle-class household makes between $47,189 and $141,568, and $95,000 is in that range.

However, that’s for the nation. When you drill down to the city and state level, you see that the income required to be middle class varies. For instance, to be considered middle class in San Francisco, you’ll need to earn between $91,126 and $151,877. In Washington, D.C., middle class is defined as income that falls between $67,815 and $113,024.

Example Jobs that Make About $95,000 a Year

Many career types fall into the $95,000 salary range, including jobs for introverts. Here are some examples of careers you can pursue, which require a range of degree levels from associate to graduate:

•   Financial Analyst: $99,890 per year

•   Industrial Engineer: $99,380 per year

•   Radiation Therapist: $98,300 per year

•   Occupational Therapist: $96,370 per year

•   Civil Engineer: $95,890 per year

•   Architect: $93,310 per year

The Bureau of Labor Statistics offers an occupation finder in its Occupational Outlook Handbook, which you can sort by median pay over $80,000.

The Takeaway

Is $95k a good salary for a single person? By and large, yes, but your spending habits, budgeting skills, and local cost of living can all impact how far your money goes. With careful budgeting and saving, you can make the most of your income.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Can I live comfortably making $95K a year?

Generally speaking, many people can live comfortably making $95,000 per year. However, it depends on several factors, including where you live, how much you spend, and where you put your money. Those who live within a budget feel the most comfortable with that salary.

What can I afford with a $95K salary?

Let’s target one of the most expensive assets most people own: a home. You may wonder how much house you can afford without stretching yourself.

Experts often suggest the 28/36 rule, which means that you should spend no more than 28% of your gross income on housing and no more than 36% on all your debt, which might include housing, student loans, car payment, credit cards, etc.

For example, according to the 28/36 rule on a $95,000 salary, you should spend no more than $2,216 on housing per month.

How much is $95K a year hourly?

A $95,000 salary breaks down to $45.67 per hour. This per-hour figure might not help you budget or understand your overall income, but it’s interesting to analyze.

How much is $95K a year monthly?

You’ll bring in $7,916.67 per month with a $95,000 per-year salary. It’s important to note that this is the general breakdown for that salary — your state may charge more in taxes and you may actually make less.

How much is $95K a year daily?

You’ll earn $365.38 per day with a $95,000 salary. Similar to your hourly rate, you might find this number difficult to help you budget or for use in a net worth calculator by age, but it’s interesting to know.

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Photo credit: iStock/JLco – Julia Amaral

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*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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.

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.

SORL-Q224-1906905-V1

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If you’re 62 years or older and are looking to move, a Home Equity Conversion Mortgage (HECM) for Purchase could help you pay for your new home. An HECM for Purchase is a government-insured reverse mortgage that you can put toward buying a house. With an HECM for Purchase, you won’t have to make mortgage payments as long as you keep up with property taxes and other obligations. However, this type of reverse mortgage can come with high closing costs and insurance premiums, so it may not be your most affordable option for financing a home. Read on for the full story of the HECM for Purchase program, along with its pros and cons.

What Is an HECM?

An HECM for Purchase is a type of HECM, which is in turn a type of reverse mortgage — specifically, the kind that is insured by the Federal Housing Administration (FHA). HECMs allow people 62 and older to convert the equity in their home into cash. (The chief HECM vs. reverse mortgage differentiator is the FHA’s involvement in HECMs.)

You’ll need to own your property outright or have a good amount of equity built up to qualify for an HECM. Eligible borrowers can turn that equity into cash and won’t have to pay back the home mortgage loan until they move, sell the home, or die. In those events, the HECM must be paid back in its entirety, along with any interest charges. An HECM has some of the same pros and cons of reverse mortgages.

What Is an HECM for Purchase?

An HECM for Purchase is a type of HECM that allows homeowners to borrow against their current residence and pay for a new one in one transaction with one set of closing costs. It’s designed for homeowners who are looking to move into a new primary residence. You can’t use an HECM for Purchase to finance a vacation home or an investment property.

Like other HECMs, an HECM for Purchase does not require repayment during the borrower’s lifetime while they (or their surviving spouse) are living in the house. However, borrowers can pay down the loan’s principal and interest if they choose. They also must meet other payment obligations, including property taxes, homeowners insurance, and maintenance costs.

The HECM for Purchase will become due if the borrower moves or dies. As a non-recourse loan, however, the HECM for Purchase will never charge more than the value of the home it was used to finance.

HECM for Purchase Requirements

There are several requirements you’ll need to meet to qualify for an HECM for Purchase. Here are the main ones.

Age Requirement (62+)

HECM for Purchase loans are exclusively offered to borrowers who are age 62 or older. By contrast, traditional mortgages don’t have an age restriction, apart from the age of majority in your state (typically at least 18).

Income and Credit Qualifications

You’ll also need to meet income and credit requirements to qualify for an HECM for Purchase. While there’s no stated minimum credit score, having debts in delinquency or default could be an obstacle to qualifying.

Lenders also consider your residual income, or the amount of income you have after subtracting certain expenses. You’ll need to show that you have sufficient residual income to keep up with living expenses.

Financial Assessment

A lender will also assess your overall finances to ensure you can meet the financial obligations of the HECM for Purchase loan, which include paying property taxes and homeowners insurance. Plus, you’ll need to make a sufficient down payment on the new property, typically around 50%.

How HECM for Purchase Works

An HECM for Purchase lets you draw on the equity of your current home to finance the purchase of your next home. It combines two transactions — a reverse mortgage and a new mortgage — into one to simplify the home purchase process.

You won’t have to make payments on your HECM for Purchase while you live in your house, but you will have to keep up with payments of property taxes, homeowners insurance, maintenance expenses, and any homeowners association fees.

HECM for Purchase loans are backed by the FHA, so you’ll need to work with a lender that specializes in these loans to get one.

Down Payment Amount

To use an HECM for Purchase, you’ll need to sell your original home and use the proceeds to make a sufficient down payment on your new home. Then you can finance the remaining amount with your HECM loan. The required down payment may range from 45% to 62% of the home’s purchase price, depending on the borrower’s and spouse’s age. If you have money left over after making the down payment, you can receive it as a lump sum or as fixed monthly payments.

Recommended: Getting a Mortgage in Retirement

Pros of HECM for Purchase

There are several benefits to taking out an HECM for Purchase loan.

•   No mortgage payments: With an HECM reverse mortgage for purchase loan, you won’t have to make principal and interest payments while you live in the house and cover essential charges, like taxes. A conventional mortgage, by contrast, requires monthly repayment.

•   More purchasing power: An HECM for Mortgage could increase your purchasing power and bring your goal of buying a new home within reach, especially if you’ve built up a good deal of equity in your current property.

•   Avoid dipping into savings: By using an HECM for Purchase to buy a home rather exhausting your savings, you can avoid draining your retirement funds or other accounts to buy a house.

•   Debt won’t exceed home value: As noted above, an HECM for Purchase is a non-recourse loan, so the debt you or your heirs owe will never exceed the home’s value, even if the property value dips in the future.

Cons of HECM for Purchase

At the same time, an HECM for Purchase loan has some downsides to consider before you borrow.

•   Charges interest, closing costs, and premiums: The HECM for Purchase can come with high closing costs, which include origination fees, title insurance, and appraisal fees. It also charges annual Mortgage Insurance Premiums and accrues interest based on the reverse mortgage interest rate you’re given at the outset of the loan.

•   Requires you to pay property taxes and other expenses: You’ll need to pay property taxes and homeowners insurance to keep the loan in deferred repayment, as well as maintain the property to acceptable standards.

•   Demands that you live in the new home full-time: Your home must be your new primary residence. If you move or sell, you’ll have to pay back the HECM for Purchase loan.

•   Calls for a large down payment: This loan program is reserved for borrowers who can make a large down payment, sometimes 50% or higher, for their new home.

Alternatives to Consider

Before applying for an HECM for Purchase, it’s worth considering alternative financing options, such as:

•   Traditional mortgage: A conventional mortgage typically requires a credit score of at least 620, a down payment (though not as high as 50%), and a debt-to-income ratio below 50% — and sometimes as low as 43%. You’ll also need to have sufficient income to qualify.

•   Home equity loan or home equity line of credit (HELOC): Homeowners can also tap into their equity with a home equity loan or HELOC. You could use this “second mortgage” to finance another home, but be cautious about over-borrowing. A lender can foreclose on your home if you miss payments.

•   Proceeds from home sale: Selling your home is another way to finance the purchase of a new one, especially if you’re downsizing to a more affordable place. In this case, you might have extra money left over to put into savings or invest.

Recommended: The Best Cities for Retirees

The Takeaway

The HECM for Purchase program can simplify the home-buying process for seniors who want to use a reverse mortgage to buy a new house. As long as you keep up with property taxes, homeowners insurance, and other required costs, you won’t have to make any mortgage payments on your HECM while you reside in your new home. At the same time, HECM for Purchase loans come with closing costs and premiums. Consider all your options to determine the best type of financing for your next home purchase.

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.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

What types of homes qualify for HECM for Purchase?

The following types of homes qualify for the HECM for Purchase program:

•   Single-family homes

•   2- to 4-unit homes where the borrower occupies one unit

•   HUD-approved condo projects

•   Individual condo units that meet FHA single-unit approved requirements

•   Manufactured homes that meet FHA requirements

The property must also meet all of the FHA’s property standards and flood requirements.

How long can I stay in the home with HECM for Purchase?

You can stay in the home you finance with an HECM for Purchase loan indefinitely. The loan will become due when the last borrower (or the borrower’s spouse) moves, sells the home, or passes away.

Are there limits on HECM for Purchase loan amounts?

An HECM for Purchase is limited to the appraised value of the home or the sales price of the new home, whichever is lower. It cannot exceed the HECM FHA mortgage limit, which is $1,149,825 for 2024.

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Photo credit: iStock/FG Trade

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility 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.

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In the event SoFi serves as broker to Spring EQ for your loan, SoFi will be paid a fee.

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An annual income of about $76,000 should put you in the position to afford a $250,000 mortgage, assuming you have relatively little other debt. But exactly what amount you’ll need to earn will depend on your interest rate, loan term, and debt level, among other factors. If you’re considering buying a new home, let’s take a closer look at how much you’ll need to earn to qualify for a $250,000 mortgage.

Income Needed for a $250,000 Mortgage

The exact income needed to afford a $250,000 mortgage loan can’t be nailed down without more information, but what we can get pretty close to is the P&I payment, which stands for principal and interest, and represents a majority of your monthly payment. However, even this calculation won’t give you an exact income number until you know your interest rate and desired loan term (15, 20, 30 years).

Other factors that will influence your monthly mortgage payment are:

•   Property taxes: Lenders often collect a portion of your property taxes each month and pay the local government on your behalf. And even if you don’t pay the taxes through your lender, you’ll need to include them in your budget.

•   Home insurance: Assuming you have a mortgage, your lender will require you purchase home insurance. Depending on the house and location, you may also be required to purchase earthquake insurance and flood insurance.

•   Loan specific fees: Different types of mortgage loans have unique fees that may increase the cost of your monthly mortgage payment. For example, the guarantee fee with a U.S. Department of Agriculture (USDA) loan, or mortgage insurance premium with a Federal Housing Administration (FHA) loan.

•   Homeowners association (HOA) fees: Since you’ll likely pay the HOA directly, these fees should not increase the cost of your mortgage payment, but they will increase your monthly expenses. Keep this in mind while house hunting.

Moving forward, let’s assume you choose a 30-year loan term and receive a 7.00% interest rate.

How Much Do You Need to Make to Get a $250K Mortgage?

Using a mortgage calculator, it’s easy to get some quick numbers for the P&I payment (principal and interest) on a $250,000 mortgage. If you’re willing to estimate, a mortgage calculator with taxes and insurance included will get you a little closer as to what to expect.

If we assume you take out a 30-year mortgage and have a 7.00% interest rate, the monthly P&I payment on a $250,000 mortgage would be $1,663. Assuming your lender wants you to have a maximum 28% housing-to-income ratio, then the minimum income you would need to make for your P&I payment would be $71,271 a year or $5,939 a month. Add in your property tax, home insurance, and private mortgage insurance (PMI, which a lender will require if your down payment is less than 20% of the home’s sales price) and you’re likely looking at a monthly payment of $2,234.

Another thing you may want to try is determine how much banks are likely to lend to you. If you know your exact gross income and monthly debts, try out a home affordability calculator. Another option is to move forward with a mortgage preapproval process so you know exactly how much you have to work with.

What Is a Good Debt-to-Income Ratio?

Ideally, lenders want borrowers to stick to a 36% debt-to-income (DTI) ratio, with a maximum of 28% going toward housing costs. However, depending on your income and credit score, some lenders may accept higher DTIs.

If we consider the cost of living by state, 28% may be too much when you account for daily expenses, such as food and gas, which can skew the income needed for a $250K mortgage. Therefore, if your job and lifestyle allow you to be flexible on where you live, you might consider checking out a ranking of the most affordable states.

What Determines How Much House You Can Afford?

Lenders look at a variety of factors when determining how much house a borrower can afford, but the big four are:

•   Income

•   DTI ratio

•   Credit score

•   Down payment amount

What Mortgage Lenders Look For

If you’re a first-time homebuyer, lenders look at the following variables for each borrower:

•   Employment history

•   Income

•   DTI ratio

•   Credit score

$250,000 Mortgage Breakdown Examples

How much income is needed for a $250,000 mortgage is significantly influenced by your rate and term. Let’s take a look at the various P&I payments you can expect with different rates and different terms:

Term	Rate (APR)	Monthly P&I Payment:	Minimum annual gross income needed to cover P&I:
15	6.00%	$2,110	$90,429
15	6.25%	$2,144	$91,886
15	6.50%	$2,178	$93,343
15	6.75%	$2,212	$94,800
15	7.00%	$2,247	$96,300
20	6.00%	$1,791	$77,014
20	6.25%	$1,827	$78,300
20	6.50%	$1,864	$79,886
20	6.75%	$1,901	$81,471
20	7.00%	$1,938	$83,057
30	6.00%	$1,499	$64,243
30	6.25%	$1,539	$65,957
30	6.50%	$1,580	$67,714
30	6.75%	$1,622	$69,514
30	7.00%	$1,663	$71,271

Pros and Cons of a $250,000 Mortgage

Buying a house comes with both benefits and drawbacks. Here are some things you should consider:

Pros of a $250,000 Mortgage:

•   Each monthly payment builds equity

•   Home can be used as collateral for low rate loans

•   More freedom to make changes to home

•   Homeownership provides a hedge against inflation

Cons of a $250,000 Mortgage:

•   Homeowners are responsible for all repairs and maintenance

•   Must save up for both down payment and closing costs

•   Must purchase home insurance

•   Must pay property taxes

How Much Will You Need for a Down Payment?

If $250,000 is the purchase price, the lowest down payment a first-time borrower could make with a conventional loan is $7,500. If you choose an FHA loan, the lowest down payment you can make is $8,750. VA loans (from the U.S. Department of Veterans Affairs) and USDA loans don’t require down payments. It’s worth noting that even if you have owned a home before, you might qualify as a first-time homebuyer from a lender’s perspective if it has been at least three years since you had ownership in a principal residence.

Can You Buy a $250K Home With No Money Down?

Yes, both USDA loans and VA loans don’t require a down payment. VA loans are for qualified active and retired military and surviving spouses, while USDA loans are for homes bought in certain rural areas the USDA has deemed to be in need of economic development.

Can You Buy a $250K Home With a Small Down Payment?

If you use a conventional loan, the lowest down payment a first-time homebuyer can make is typically 3%. The lowest down payment with an FHA loan is 3.5%. USDA and VA loans don’t require a down payment, but they do have eligibility requirements.

Is a $250K Mortgage with No Down Payment a Good Idea?

Whether skipping the down payment on a home is a good idea depends on your long-term goals and what you hope to do. If you want to save money over the life of the loan, making a down payment will save you money in interest. If you need the money now for other endeavors, there’s nothing wrong with choosing a loan that doesn’t require a down payment.

Can’t Afford a $250K Mortgage With No Down Payment?

If you can’t afford a $250,000 mortgage, there are some things you can do to make homeownership a little easier.

Pay Off Debt

Paying off your debt will lower your DTI, improve your credit score, and give you more cash to work with each month. Because there are so many benefits, it may be worth your time to pay down as much debt as possible before applying for a mortgage.

Look into First-Time Homebuyer Programs

There are many first-time homebuyer programs across the United States. Assistance can come in various forms. It may be a low-rate loan, a forgivable loan, or a grant. It often comes as a forgivable loan, which doesn’t require any form of repayment as long as certain conditions are met. Assistance is often first come first served, so apply early if you’re interested.

Build Up Credit

The lower your score, the higher your interest rate. Strengthen your credit score, and you could qualify for a better interest rate that would lower your monthly payment and save you money in interest over the life of the loan.

Start Budgeting

Take steps to eliminate unnecessary spending so you can put as much as you can toward your savings. Monthly subscriptions and dining out, for example, may need to be put on the back burner as you work toward your savings goals.

Also, any lump payments you receive throughout the year could be put toward savings. For example, an end-of-the-year bonus or tax refund should be tucked away as soon as it’s received. Currently, the average federal tax refund is $2,869. That’s 33% of an $8,750 down payment.

If you’re new to the world of mortgages and financing, check out our home loan help center where we go in-depth on everything you need to know about buying your first home or moving forward with a mortgage refinance.

Alternatives to Conventional Mortgage Loans

It depends on the seller, but some sellers are open to lease-to-own or seller financing. Another option may be to pursue a portfolio loan with a local bank or credit union.

Mortgage Tips

Here are some tips to qualify for a mortgage:

•   Pay down your debts

•   Pay close attention to your credit score

•   Save up for a down payment

•   Stick with your current employer

•   Gather all supporting paperwork needed for your mortgage application

The Takeaway

For a 30-year loan on a $250,000 mortgage with a 7.00% interest rate, you’ll need a gross income of around $76,000 a year. But exactly how much income you would need to have depends on several factors that are specific to you, including your existing debts, your credit score, and what loan term you choose and what interest rate you qualify for.

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.

SoFi Mortgages: simple, smart, and so affordable.

FAQ

How much income do you need to qualify for a $250,000 mortgage?

To cover the monthly mortgage payment on a $250,000 mortgage, you’ll need an income of around $76,000 a year. For the most accurate estimate, you will need to know your exact interest rate, property taxes, home insurance, and home loan term.

Can I afford a $250K house on a $50K salary?

It would be difficult to afford a $250,000 house on a $50,000 annual salary unless you are able to make a large down payment, which would reduce your monthly mortgage costs to a manageable level. If you earn $50,000 a year and have minimal debts, you could probably qualify for a mortgage loan of around $150,000.

What is the monthly payment on a $250K mortgage?

The monthly principal and interest payment on a $250,000 home mortgage loan ranges from around $1,500 to $2,250, depending on the loan term (15 vs. 30 years) and interest rate (6.00% to 7.00%, although a higher or lower rate might be possible). The shorter the term and the higher the interest rate, the greater your monthly payment will be.

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Photo credit: iStock/yavorskiy

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 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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This just in: Houses are expensive. But some houses are really expensive. If you have your heart set on a luxurious oceanside mansion (or just a modest home in an ultra-high-cost city like New York or San Francisco), you may need to seek out a jumbo mortgage: one whose dollar amount surpasses the conforming loan limits set by the Federal Housing Finance Administration (FHFA) each year. In 2024, that limit is $766,550 in most cases, though in some high-cost areas the limit can range up to $1,149,825. Any mortgage that exceeds those amounts is considered a jumbo loan.

What Are Jumbo Loans?

Jumbo loans are those in which the mortgage total surpasses the conforming loan limits set by the FHFA. The conforming loan limits change annually. As noted above, in 2024, a jumbo loan is one whose total is $766,550 or more in most areas, though in select high-cost areas, the limit goes up to $1,149,825.

Your mortgage total is the amount of money you borrow in order to purchase a house — an amount that can be calculated by subtracting your down payment from the agreed home purchase price. (Keep in mind, though, that this figure isn’t the same as how much you’ll pay in full over the lifetime of the loan, since you’ll also owe interest to the bank that provides the loan. Still have questions? Check out our mortgage payment calculator with interest.)

Jumbo vs Conventional Loan

Conventional loans are offered privately through banks, credit unions, and other financial institutions, unlike other loans which are supported by a government agency such as the Federal Housing Administration (FHA) or USDA (U.S. Department of Agriculture). Conventional loans are easily the most common type of home loan.

Jumbo loans are a type of conventional loan. But whereas most conventional loans are also conforming loans and are available with a minimum down payment as low as 3% for first-time homebuyers, jumbo loans are considered nonconforming and typically require a larger down payment — usually at least 10%. You’ll also likely need a very high credit score in order to be eligible to take out a jumbo loan.

Determining Jumbo Loan Limits

As we’ve seen above, the specific jumbo loan limits where you live (or where you’re planning to buy a home) will vary depending on the area’s cost of living. The FHFA offers a convenient conforming loan map that allows you to see what the conforming loan limits (otherwise known as jumbo loan limits) are in your area, broken down by county.

How Loan Limits Are Calculated

The jumbo loan limit is determined each year by the FHFA using current housing price data. That way, the limits are tied to real information in the world about how much it actually costs to buy a home in a given area. Conforming loan limits — also known as the jumbo loan limits — change each year; new limits for the coming year are typically announced in late November.

Current Jumbo Loan Limits

As mentioned above, in 2024, the jumbo loan limit for the vast majority of the U.S. is $766,550, and the highest conforming loan limit, in the most expensive places to live, is $1,149,825. To see exactly what the jumbo loan limits are in your area, visit the FHFA’s map.

Qualifying for a Jumbo Loan

Jumbo loans are, well, big — which means the qualification metrics for getting a home loan are pretty strict. (After all, that’s a whole lot of money the lender stands to lose if you default.) While every lender has its own specific algorithm for qualifying potential borrowers, here are some rules of thumb when it comes to qualifying for a jumbo loan:

Credit Score Requirements

While there’s no specific credit score that guarantees you’ll qualify for a jumbo loan, most lenders will likely require a high one — after all, it’s a fairly risky prospect to lend that much money to someone. Credit scores range from 300 to 850. Scores of 670 to 739 are considered good; scores of 740 to 799 are considered very good, and scores of 800 and above are considered exceptional.

Down Payment Requirements

We touched on this briefly, but jumbo loan lenders often require their borrowers to provide a more substantial down payment than conventional loan lenders do. While a minimum of 10% is a good rule of thumb, some lenders may ratchet up the minimum to 25% or 30%.

Considering how large jumbo loans are already, that means you’ll probably need a significant amount of cash lying around in order to successfully apply for one — 10% of $800,000, a relatively small jumbo loan, is already $80,000.

Debt-to-Income Ratio Requirements

Your debt-to-income ratio, or DTI, is a measurement of your existing debt burden expressed as a percentage. It’s calculated by totalling all your monthly debt payments and dividing that figure by your gross monthly income.

Conventional loans usually required a DTI of 50% or lower — and that’s the absolute max. (Many lenders cut off qualification at lower percentages.) Again, while there’s no one advertised maximum DTI for a jumbo loan, you’ll likely want to have as little debt as possible in order to qualify — not to mention in order to have the money on hand each month to make that massive mortgage payment.

Income and Asset Documentation

Jumbo loan lenders are, of course, primarily concerned with your ability to repay the loan. That means that, along with the above-mentioned factors, they’ll also want proof that you earn a reliable and high income — and in some cases that you’ve already stockpiled enough wealth that you’ll be able to make your payments for several months even if you lose your job. For this reason, qualifying for a jumbo loan can be especially challenging for a self-employed worker.

Advantages and Disadvantages of Jumbo Loans

So, now that you understand them better, is a jumbo loan right for you? Like any financial decision, taking out a jumbo loan has both benefits and drawbacks to carefully consider. Here are some of the pros and cons of jumbo loans.

Advantages of Jumbo Loans

Jumbo loans offer those who qualify the opportunity to purchase a costly home that they might otherwise not have access to. They may also be available at similar interest rates to lower conforming loans, and both fixed and adjustable rates are available in 15- and 30-year terms.

Disadvantages of Jumbo Loans

On the other hand, jumbo loans are, well, jumbo-sized — which means the total amount you’ll pay over time is, too. Even a low interest rate can add up to a lot on a large principal balance, and jumbo loans also have more stringent qualification and down payment requirements than their conforming counterparts. Associated closing costs and fees can be higher, too.

Alternatives to Jumbo Loans

If you find yourself having trouble qualifying for a jumbo loan, you could look into other nonqualifying mortgages, such as bank statement loans — or potentially borrow a significant amount of money from family or friends. However, if the home you’re vying for is that much of a stretch, it may make more financial sense to find something a bit more modest and apply for a conforming loan instead.

The Takeaway

Jumbo loans are large mortgages that don’t conform to the limits set by the FHFA — and therefore come with stricter qualification requirements. While jumbo loans can help those who qualify to access a high-value house, they can also be hard to keep up with unless your income is correspondingly high.

When you’re ready to take the next step, consider what SoFi Home Loans have to offer. Jumbo loans are offered with competitive interest rates, no private mortgage insurance, and down payments as low as 10%.

SoFi Mortgage Loans: We make the home loan process smart and simple.

FAQ

What does a jumbo loan mean?

Jumbo loans are those whose totals exceed the conforming loan limits set each year by the FHFA. For 2024, that limit is $766,550 in the vast majority of the U.S.; in some areas with a high cost of living, the conforming loan limit can be as high as $1,149,825.

What are the disadvantages of a jumbo loan?

Along with their extra-large monthly mortgage payments, jumbo loans also come with stricter eligibility requirements and higher minimum down payments. In most cases, you’ll need to pony up at least 10%, and some lenders may require as much as 30% up front.

Why are jumbo loan limits necessary?

Most mortgage loans issued in the U.S. are guaranteed by Fannie Mae and Freddie Mac, which helps reduce risk for lenders and ensure that loans are affordable and available to homebuyers. But the guarantee has to stop somewhere, and conforming loan limits draw that line. This is why jumbo loans have more stringent borrower requirements than conforming loans — lenders who make jumbo loans don’t have Fannie Mae and Freddie Mac to fall back on if a jumbo borrower defaults.

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Photo credit: iStock/Wirestock

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 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.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

^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.

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Earning $55,000 a year can be a good salary for a single person. While it’s less than the national average salary of $63,795, that amount is still higher than what the typical worker earns in some states.

Of course, determining whether a $55,000 annual salary is enough for you to live on depends on where you live, your lifestyle, your financial obligations, and a number of other factors. Let’s dive in.

Is $55K a Good Salary?

The American economy is much different now than it was just a few years ago. While the job market has stayed consistently strong, inflation has outpaced wages. In fact, wage growth was three percentage points lower than overall inflation, according to a November 2023 survey conducted by Bankrate. You don’t need a money tracker to tell you that this means a $55,000 annual salary no longer goes as far as it once did.

But inflation is just one piece of the puzzle. Another factor to consider is where you are in your career. While a salary of $55K is below the average salary in the U.S., it can be considered a good wage, especially if you’re just starting out.

Recommended: What Is a Good Entry-Level Salary?

Average Median Income in the US by State in 2024

Certain states tend to pay better, often because they have a higher cost of living. The following chart shows the median income in each state, according to U.S. Census Bureau data.

State	Median Household Income
Alabama	$59,609
Alaska	$86,370
Arizona	$72,581
Arkansas	$56,335
California	$91,905
Colorado	$87,598
Connecticut	$90,213
Delaware	$79,325
Florida	$67,917
Georgia	$71,355
Hawaii	$94,814
Idaho	$70,214
Illinois	$78,433
Indiana	$67,173
Iowa	$70,571
Kansas	$69,747
Kentucky	$60,183
Louisiana	$57,852
Maine	$68,251
Maryland	$98,461
Massachusetts	$96,505
Michigan	$68,505
Minnesota	$84,313
Mississippi	$52,985
Missouri	$65,920
Montana	$66,341
Nebraska	$71,772
Nevada	$71,646
New Hampshire	$90,845
New Jersey	$97,126
New Mexico	$58,722
New York	$81,386
North Carolina	$66,186
North Dakota	$73,959
Ohio	$66,990
Oklahoma	$61,364
Oregon	$76,362
Pennsylvania	$73,170
Rhode Island	$81,370
South Carolina	$63,623
South Dakota	$69,457
Tennessee	$64,035
Texas	$73,035
Utah	$86,833
Vermont	$74,014
Virginia	$87,249
Washington	$90,325
West Virginia	$55,217
Wisconsin	$72,458
Wyoming	$72,495

Recommended: Highest Paying Jobs by State

Average Cost of Living in the US by State in 2024

The term cost of living refers to the amount of money someone needs to cover day-to-day expenses. According to the U.S. Bureau of Economic Analysis (BEA), here’s how much residents in each state spend on necessities like housing, utilities, food, and health care.

State	Personal Consumption Expenditure
Alabama	$42,391
Alaska	$59,179
Arizona	$50,123
Arkansas	$42,245
California	$60,272
Colorado	$59,371
Connecticut	$60,413
Delaware	$54,532
Florida	$55,516
Georgia	$47,406
Hawaii	$54,655
Idaho	$43,508
Illinois	$54,341
Indiana	$46,579
Iowa	$45,455
Kansas	$46,069
Kentucky	$44,193
Louisiana	$45,178
Maine	$55,789
Maryland	$52,651
Massachusetts	$64,214
Michigan	$49,482
Minnesota	$52,849
Mississippi	$39,678
Missouri	$48,613
Montana	$51,913
Nebraska	$37,519
Nevada	$49,522
New Hampshire	$60,828
New Jersey	$60,082
New Mexico	$43,336
New York	$58,571
North Carolina	$47,834
North Dakota	$52,631
Ohio	$47,768
Oklahoma	$42,046
Oregon	$52,159
Pennsylvania	$53,703
Rhode Island	$52,820
South Carolina	$46,220
South Dakota	$48,997
Tennessee	$46,280
Texas	$49,082
Utah	$48,189
Vermont	$55,743
Virginia	$52,057
Washington	$56,567
West Virginia	$44,460
Wisconsin	$49,284
Wyoming	$52,403

How to Budget for a $55K Salary

Depending on your financial obligations, regional cost of living, and other factors, you may find it easier to stretch a $55,000 annual salary with the help of a budget. (A budget planner app can help you set up a spending plan and allow you to monitor your credit score.)

One method to try is the 50/30/20 budget, which recommends setting aside 50% of your earnings for needs (like housing, food, and transportation); 30% for wants (like entertainment and travel); and 20% for savings and debt repayment.

Recommended: US Average Income by Age

Maximizing a $55,000 Salary

When it comes to making every dollar count, it helps to identify the biggest line items in your budget. Typically, these will be housing, transportation, and food. If you’re looking for ways to stretch a $55,000 annual salary, these may be natural places to start trimming. For instance, if you live alone and are open to a shared housing arrangement, you may want to consider getting a roommate. Or if you live near coworkers, it may be worthwhile to explore carpooling to work.

But there are other ways to maximize a $55,000-a-year salary. Here are a few strategies to consider:

•   Build up an emergency fund. Aim to save at least three to six months’ worth of basic living expenses.

•   Pay down debt. If you’re carrying a credit card balance and you’ve already built up an emergency fund, you may want to focus on paying off debt.

•   Step up your retirement savings. If you have a 401(k) retirement plan with your employer, run the numbers and see if you can increase your monthly contributions. You could possibly get an employer match as well.

Is $55,000 a Year Considered Rich?

While $55,000 a year is no six-figure salary, it can be more than enough for a single person to live comfortably. This is particularly true if they have a low cost of living, little to no debt, or are only supporting themselves.

But is that salary enough to classify someone as rich? One way to think about it is to look at the person’s net worth. To calculate net worth, simply subtract outstanding debts or liabilities from the value of all combined assets.

You can also use tools like a net worth calculator by age to help you determine how a $55k a year salary stacks up.

Is $55K a Year Considered Middle Class?

The Pew Research Center defines middle class as households with a salary that’s two-thirds to double the national median income. By that definition, “middle class” is household income ranging from $47,189 and $141,568, which includes $55,000.

Examples of Jobs that Make About $55,000 a Year

Whether you’re looking for jobs for introverts or entry-level roles, you’ll likely find a number of positions that pay around $55,000 a year. Here are some examples:

•   Firefighter: $57,120

•   Postal service mail carrier: $56,510

•   Carpenter: $56,350

•   Counselor: $53,710

•   Retail supervisor: $52,030

The Takeaway

While $55,000 a year is lower than the national average salary, it may be enough for a single person to support themselves. However, cost of living, financial obligations, personal spending habits, inflation, and other factors can impact how far the money goes. To help make the most of your salary, consider strategies like creating a budget and savings plan you can stick to and using financial tools to monitor your spending.

Take control of your finances with SoFi. With our financial insights and credit score monitoring tools, you can view all of your accounts in one convenient dashboard. From there, you can see your various balances, spending breakdowns, and credit score. Plus you can easily set up budgets and discover valuable financial insights — all at no cost.

See exactly how your money comes and goes at a glance.

FAQ

Can I live comfortably making $55k a year?

It’s possible for a single person with little to no debt and no dependents to live comfortably on a salary of $55,000. However, it may require you to carefully manage your budget and control your expenses.

What can I afford with a $55k a year salary?

Depending on the city and state that you live in, you should be able to afford housing, transportation, healthcare, and some discretionary spending. But just how much will largely depend on your area’s cost of living, your overall expenses, and your budget.

How much is $55k a year hourly?

A $55,000 a year salary works out to around $22.50 per hour.

How much is $55k a year monthly?

If you make $55,000 a year, you may earn around $4,583 per month, depending on your tax situation.

How much is $55k a year daily?

An annual salary of $55,000 comes out to around $220 per day.

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Photo credit: iStock/PeopleImages

SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.

*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.

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.

Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.

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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