On a salary of $36,000 per year, you can afford a house priced around $100,000-$110,000 with a monthly payment of just over $1,000. This assumes you have no other debts you’re paying off, but also that you haven’t been able to save much for a down payment.
Of course, you’ll want to talk to a lender for your individual situation, which could qualify you for more (or less). If it sounds overwhelming, don’t worry. We’ll walk you through what it takes to qualify for a home, no matter what your income level is.
What Kind of House Can I Afford With $36K a Year?
At a $36,000 annual income, you may need some help affording a home in today’s market. You’ll need to eliminate debt and make sure you have a good credit score, as well as find programs and lenders that can help. In addition to income and debt, your lender will take into account:
• Your down payment savings
• What taxes and insurance will cost
• What interest rate you qualify for
• The type of loan you’re applying for
• Whether or not they can let your debt run up to 50% of your income
First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.
Understanding Debt-to-income Ratio
Beyond interest rates, debt is your biggest enemy to home affordability. The more debt you have to pay on a monthly basis, the less you’re able to pay toward a mortgage. In other words, your $200 monthly credit card payment could cost you thousands on the purchase price of a home.
To understand the debt-to-income ratio (DTI), add all of your debts together, and then divide that number by your monthly income. Your lender calculates your DTI ratio to determine how much you can afford as a monthly payment on a mortgage. The guideline is 36%, but some lenders can go higher on a home mortgage loan.
💡 Quick Tip: To see a house in person, particularly in a tight or expensive market, you may need to show the real estate agent proof that you’re preapproved for a mortgage. SoFi’s online application makes the process simple.
How to Factor in Your Down Payment
A down payment increases how much home you’ll be able to qualify for. The more you’re able to put down, the more home you’ll be able to afford.
You’ll also want to consider whether you can put down a deposit of more than 20% so you don’t have to buy mortgage insurance. This may help you qualify for a higher mortgage. Use a mortgage calculator to see how a down payment affects home affordability.
Factors That Affect Home Affordability
Home affordability goes beyond your down payment and DTI ratio. You also want to look at:
• Interest rates When interest rates are high, borrowers qualify for a lower mortgage. When they’re low, it may be possible to qualify for a higher mortgage.
• Credit history and score Your credit score is a reflection of your credit habits, and with a higher credit score, you’ll qualify for the best interest rates, giving you more buying power.
• Taxes and insurance If you live in an area with higher taxes, insurance, or homeowners association dues, these will be taken into account by your lender. You’ll qualify for a lower mortgage amount when these numbers are high.
• Loan type Depending on the type of loan you get, your interest rate, credit score, and down payment amount can affect how much house you can afford.
• Lender Lenders have the final say when it comes to approving you for a mortgage. In special circumstances, you may be able to qualify for more than a 36% DTI ratio. Some lenders approve borrowers with a DTI ratio around 50%.
• Location If you’re shopping in a state with a high cost of living, you’ll have a hard time qualifying for a mortgage no matter what your income level is. If you’re considering other areas, you may want to look at the best affordable places to live in the U.S.
How to Afford More House With Down Payment Assistance
Down payment assistance programs can help you qualify for a larger mortgage. These types of programs have money to help with down payment or closing costs. They are usually offered at the state or local level with both grant and second mortgage programs. They may limit participation to first-time homebuyers or borrowers with lower incomes, but you should still look into these programs and see if you can qualify.
Examples include CalHFA MyHome Assistance Program and the “Home Sweet Texas” Home Loan Program. You can look for programs in your own state, county, and city.
Recommended: Tips to Qualify for a Mortgage
How to Calculate How Much House You Can Afford
Knowing how much home you are likely to qualify for doesn’t have to be a mystery. While your lender may have flexibility, they generally follow these guidelines:
The 28/36 Rule: Lenders will look for housing payments (including mortgage, taxes, and insurance) to be more more than 28% of your income and total debt payments (including mortgage, car loan, student loan, etc.) to be less than 36% of your income.
The 35/45 Rule: Some lenders allow for higher debt levels. This rule says the housing payment can be up to 35% of your income and total debt to be 45%.
An easy way to calculate how much home you can afford is with a home affordability calculator.
Home Affordability Examples
On a $36,000 annual salary, you’ll have $3,000 each month for expenses. Using the 36% debt-to-income ratio, you can have a maximum debt payments of $1,080 ($3,000 * .36). In the two examples below, taxes ($2,500), insurance ($1,000), and interest (6%) are the same for a 30-year loan term.
Example #1: Debt limits home affordability, even with large down payment
Monthly credit card debt: $100
Monthly car payment: $500
Student loan payment: $100
Total debt = $700
Down payment = $20,000
Maximum DTI ratio = $3,000 * .36 = $1,080
Maximum mortgage payment = $380 ($1,080 – $700)
Home budget on $36,000 salary = $34,733
Example #2: No down payment, but little debt
Monthly credit card debt: $0
Monthly car payment: $0
Student loan payment: $100
Total debt = $100
Down payment: $0
Maximum DTI ratio = $3,000 * .36 = $1,080
Maximum mortgage payment = $980 ($1,080 – $100)
Home budget on $36,000 salary = $96,314
How Your Monthly Payment Affects Your Price Range
The amount you’re able to pay toward a mortgage each month determines how much home you’ll be able to afford. Any monthly payments you have, such as debt, can take away from how much you’re able to pay for a mortgage. Conversely, how much income you earn in a month can improve how much mortgage you can qualify for.
Interest rates also play a huge role in your monthly payment. Higher interest rates mean you’ll qualify for a lower mortgage while lower interest rates improve home affordability. That’s why homeowners get a mortgage refinance when interest rates drop.
Recommended: Home Loan Help Center
Types of Home Loans Available to $36K Households
The different types of mortgage loans also affect home affordability. Some have a zero down payment option, flexible credit requirements, less expensive mortgage insurance, and varying interest rates. You’ll want to consult with your lender to determine what loan type of right for you.
• FHA loans: Loans backed by the Federal Housing Administration are great for buyers with unique credit situations that can’t get approved for conventional financing. It can be more expensive to go with an FHA loan, but there are low down payment options and flexible credit requirements for those with a score as low as 500.
• USDA loans: United States Department of Agriculture mortgages, available in rural areas, offer great interest rates, zero down payment options, and competitive mortgage insurance rates. Some USDA mortgages are directly serviced by USDA, and have a subsidized interest rate.
• Conventional loans: Many borrowers opt for conventional financing if they qualify. Over the course of a mortgage, this is one of the least expensive types due to competitive interest rates and mortgage insurance premiums that drop off after you pay down the loan past 80%.
• VA loans: A loan from the U.S. Department of Veterans Affairs is hard to beat for service members, veterans, and others who qualify. You may be able to qualify for a home purchase price with no down payment. VA loans may have great interest rates and flexible credit requirements (depending on the lender).
💡 Quick Tip: Active duty service members who have served for at least 90 consecutive days are eligible for a VA loan. But so are many veterans, surviving spouses, and National Guard and Reserves members. It’s worth exploring with an online VA loan application because the low interest rates and other advantages of this loan can’t be beat.†
The Takeaway
Purchasing a home on a $36,000 salary is a feat you’ll need help with in a market where the U.S. median sale price tops $342,000. Whether it’s down payment assistance, paying down debt, nurturing your credit score, or adding income, there are a lot of moves you can make to bolster your home budget. In the end, when you move into a place that’s all yours, the hard work will be worth it.
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 $36K a good salary for a single person?
A single person can afford to live on $36,000 a year in more affordable places in the U.S., but it could still be difficult to afford to buy a home in today’s real estate market.
What is a comfortable income for a single person?
The median income for a single person is $56,929, according to data from the U.S. Census, but a comfortable income for a single person depends on your lifestyle.
What is a liveable wage in 2024?
What is livable varies greatly by location. For a single person living in San Francisco, a living wage is equivalent to $26.63 per hour. In other cities, it’s considerably less.
What salary is considered rich for a single person?
If you make more than $234,342 per year, you would make more than 95% of earners in the United States. But what feels “rich” is going to depend on your lifestyle and where you live.
Photo credit: iStock/mapodile
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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.
†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.
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.
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.
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