How Much House Can I Afford With a 50K salary? (All the Info)

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Malcolm-Wiley Floyd

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Apr 24, 2023

CEO and Co-Founder of Stairs Financial, a YC-backed startup that connects first-time home buyers with down payment assistance programs across the US. Malcolm-Wiley studied economics at Harvard and is a licensed mortgage broker.

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    16.8% of households in the U.S. have an income between $50,000 and $74,999. More households occupy this income bracket than any other. So you and a lot of other people are likely wondering, “How much house can I afford with a 50K salary?”

    There are a lot of variables that go into answering this question: your financial situation, your debt-to-income ratio, your down payment amount, and external factors like mortgage interest rates. 

    This might sound like a lot. But it’s actually pretty easy to understand once you know all the variables and how they apply to your situation. 

    In this article, we help you understand exactly how much house you can afford with a 50K salary. We break down what you can afford and show you how to get more for your money with options like down payment assistance.

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      Disclaimer: This article is for informational purposes only and should not be considered as legal or financial advice. Please consult an attorney, mortgage lender, or CPA for guidance on your specific situation.

      How much house can I afford with a salary of 50K?

      These aren’t hard and fast numbers, but generally speaking, you can afford a house that costs between $123,500 and $292,500 with a salary of $50K. Your individual price range will vary based on your existing debts, your credit score, how much down payment you can offer, and other factors.

      We’ll dig into these other factors shortly, but here is a breakdown of roughly how much house you can afford with a salary of 50K. 

      Annual Salary$50,000$50,000$50,000
      Down Payment$5,000$15,000$30,000
      Existing Debts$0$0$0
      Mortgage Rate7.168%7.168%7.168%
      Home Purchase Budget
      (25% of monthly income
      spent on mortgage payments)

      $123,500

      $143,000

      $159,000
      Home Purchase Budget
      (28% of monthly income)
      $138,400$156,800$175,600
      Home Purchase Budget
      (36% of monthly income)
      $178,400$199,100$216,700
      Home Purchase Budget
      (40% of monthly income)
      $198,385$220,550$238,300
      Home Purchase Budget
      (50% of monthly income)
      $248,300$273,600$292,500

      Numbers based on a standard 30-year mortgage and no additional debts.

      Most financial experts recommend spending between 25% and 33% of your monthly income on housing expenses, and some types of home loans, such as FHA loans, allow you to spend up to 50% of your monthly income on your mortgage payment.

      How much of your income can be dedicated to your mortgage payment is up to you, based on your financial situation.

      The sticking point is that you typically must get a loan to buy a house, and loan officers consider how much of your monthly income goes to pay off debt, including your mortgage and any other debts you hold. 

      Loan officers evaluate this through a metric called debt-to-income ratio, which we explain in the next section.

      Debt-to-income ratio and the 28/36 rule

      As you decide how much house you can afford, it’s important to take a hard look at your other debts and how much additional debt you’ll have once you add your mortgage loan. 

      For this, there are two important numbers: debt-to-income ratio; and the 28/36 rule.

      Calculating your debt-to-income ratio

      Your debt to income ratio is a number loan officers use to indicate what percentage of your income is dedicated to paying off your debts. Debt-to-income ratio is a number between zero and one, with one meaning that one hundred percent of your income goes to paying off debt.

      Loan officers look at your debt-to-income ratio because it helps them quickly evaluate whether or not you can afford to make the payments on a mortgage loan.

      Calculating your debt-to-income ratio is as simple as dividing your current debt payments by your monthly income.

      Total monthly debts / gross monthly income = debt-to-income ratio

      A $50,000 yearly salary is about $4,167 in monthly income. Here are a few debt-to-income ratio examples to clarify how this works:

      • $650 monthly debts / $4,167 gross monthly income = 0.156 debt-to-income ratio (15.6% of your monthly income goes to paying off debt).
      • $500 monthly debts / $4,167 gross monthly income = 0.112 debt-to-income ratio (11.2% of your monthly income goes to paying off debt).
      • $250 monthly debts / $4,167 gross monthly income = 0.058 debt-to-income ratio (5.8% of your monthly income goes to paying off debt).

      As you may have guessed from the explanation and examples, a lower debt-to-income ratio is generally better, both from a personal finance perspective and for getting approved for a home loan. 

      The 28/36 rule

      Understanding your debt-to-income ratio is important, because it helps you see how lenders will evaluate your financial position. But most of us don’t think in ratios like this when we work on our personal finances. 

      Enter the 28/36 rule. 

      For figuring out what house you can buy on $50K a year, many personal finance professionals recommend using what they call the 28/36 rule. 

      This rule means you cap your mortgage payments at 28% of your gross monthly income and limit your total monthly debt payments to 36% of your gross monthly income, including your housing payments.

      On a 50K a year salary, (a $4,167 gross monthly budget) this is what the 28/36 rule looks like in absolute numbers:

      • 28% of your monthly income is about $1,167.
      • 36% of your monthly income is about $1,500.

      Even though buying a house is smart, a mortgage loan is still debt. So, if you followed the 28/36 rule exactly, that would mean that you’d spend $1,167 on your mortgage payment, and $333 on other monthly debt payments, for a total of $1,500 in total monthly payments.

      How a down payment affects the mortgage you can get on 50K a year

      The size of your down payment has a notable impact on how much house you can afford with a 50K salary. The larger your down payment, the less you have to borrow, and the lower your monthly payments will be. 

      Generally, you can buy a more expensive house on the same monthly budget if you make a larger down payment. Even if you’ve saved up some money for a down payment, it’s worth your time to find out if you can increase that amount with the help of down payment assistance.

      If you make 50K a year and are a first-time homebuyer, there’s a good chance you qualify for some form of down payment assistance. 

      How down payment assistance affects the amount of house you can afford

      Down payment assistance gives you more money to use for your down payment and other closing costs. Some down payment assistance programs can also be used to buy down your mortgage interest rate. 

      Down payment programs often offer thousands or tens of thousands of dollars in assistance, which is enough to make a serious impact on your monthly mortgage payments.

      Annual Salary$50,000$50,000$50,000$50,000
      Down Payment$0$5,000$15,000$30,000
      Existing Monthly Debts$0$0$0$0
      Mortgage Rate7.1687.1687.1687.168
      Home Purchase Budget $133,700$138,400$156,800$175,600

      Numbers based on a standard 30-year mortgage and no additional debts. Home purchase budget listed is 28% of total monthly income.

      There are dozens of down payment assistance programs in each state, as well as national programs. Many of these programs are specifically designed to help disadvantaged and first-time home buyers. 

      Stairs can help you find the best down payment assistance programs available in your area. Learn more.

      Home purchase budget with down payment assistance

      As you can see in the table above, you can afford a house that costs $175,600 on a $50K salary if you put up a $30,000 down payment. For simplicity, we used our numbers from before and stuck with the 28/36 rule.  

      The difference between a zero down payment and a $30,000 is $349 per month in mortgage payments. 

      If you’re thinking in terms of home prices, increasing your down payment increases how much house you can afford by more than the down payment itself.

      With a fixed monthly payment of $1,167, or roughly 28% of your monthly income, your maximum home purchase price with a zero down payment is $133,700. With a down payment of $15,000, your maximum purchase price is $156,800.

      You get $23,100 more house for a down payment of $15,000. That’s a pretty good value.

      The difference is even more stark if you increase your down payment from zero to $30,000. In that case your maximum purchase price goes up by $41,900.

      Long story short, increasing your down payment can save you a lot of money or significantly increase your purchasing power. So you should definitely take any down payment assistance you qualify for.

      How much house can I afford on $50,000 in my part of the country?

      The cost of living varies from state to state, and this includes the cost of housing. If you live in an area with a high cost of living, chances are you’ll face higher home prices.

      While there’s nothing wrong with considering relocating to one of the cheapest states to buy a house, how much house you can afford is still based more on your income and budget than where you live.

      If you can afford a $175,600 house in one state, you’ll be able to afford a house of about the same price in another state. The catch is that there may be fewer houses in your price range if you happen to live in an expensive state.

      However, even very expensive states have areas which are more affordable. With a little searching, and maybe some down payment assistance, it’s often possible to find a house within your budget and within your state.

      What else affects home affordability?

      Most of your mortgage costs will get paid through your mortgage payments. However, it’s important to understand what these costs are and plan for them when you do your budgeting. That way you can accurately calculate how much house you can afford with a $50K salary.

      These are the costs that impact your monthly mortgage payments, and in turn your home-buying budget.

      Interest rates

      You’re probably familiar with interest rates. They tend to have the biggest impact on how much house you can afford. Unfortunately, interest rates change almost daily. So it’s important to get the most recent rates when you tally up your budget.

      However, a handy piece of information about interest rates is that you can get a lower interest rate if you make a larger down payment.

      Credit score

      A higher credit score qualifies you for lower interest rates because a higher credit score signals to lenders that you’re less likely to miss your mortgage payments.

      However, a higher credit score is also valuable because most down payment assistance programs require a minimum credit score between 600 and 640. A higher credit score can give you more access to down payment funds.

      Property taxes

      Property taxes are one of those costs that typically get folded into your monthly mortgage payments. As we mentioned before, property taxes aren’t a major cost, but it’s worth knowing the property tax rate in your area and figuring it into your home buying budget from the start.

      Homeowner’s insurance

      Most lenders require homeowner’s insurance, so it’s not really an option. Homeowner’s insurance also gets wrapped up in your mortgage payment, in most cases.

      Homeowner’s insurance varies pretty widely from state to state, based on how likely it is that your home will get damaged by some sort of natural disaster or other event. 

      If you want to be proactive about it, shop around for the most affordable insurance and be ready to give that insurance company’s information to your lender when you make your home purchase.

      Private Mortgage Insurance (PMI)

      Private mortgage insurance (PMI) is required if your down payment is less than 20% of the price of the house. Yet another reason to get all the down payment assistance you qualify for.

      The good news is that most private mortgage insurance cancels automatically once you have 22% equity in your home, and you can usually request to stop paying for private mortgage insurance once your home equity reaches 20%.

      Homeowners Association (HOA) Fees

      Not every house is within an homeowners association (HOA) area, but HOA fees can be hefty. If you think you’ll likely be purchasing a home that’s in an HOA, it’s best to factor HOA fees into your budget.

      Down payment assistance is your home ownership key

      Buying a home on a $50K yearly income may seem like a long shot. However, it’s entirely within reach with the right down payment assistance, and there’s plenty of assistance to go around.

      Down payment assistance could help you get a home months or years sooner than you think, and help you save tens of thousands on your home. The problem is that information about down payment assistance programs is disparate and difficult to find.

      Stairs Financial solves that problem.

      With Stairs, you can easily find out exactly which down payment assistance programs are available to you, so you can make a more informed decision.

      Stairs connects you to qualified lenders who work with all the down payment assistance programs you might qualify for, then lets you compare your options side-by-side.

      Learn more.

      Find up to $15,000 towards a home 🏠

      Compare local down payment assistance and find a mortgage, fast.

      Where do you want to buy?
        Search by ZIP code, address, city, county, or neighborhood
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