I’m going to give you some satisfaction by giving you some ballpark numbers right off the bat here, but you better read beyond the chart below! Otherwise you’re going to be leaving out some major considerations when it comes to these numbers!

**As a very general rule, you can afford a house that is anywhere from 2 times to 2.5 times your yearly gross income (which is income before taxes).** If you have two incomes in the soon-to-be household, then of course you’d combine those incomes and multiply by 2 or 2.5 to get a range.

With that in mind:

- If you make $40,000, you could afford a house priced between $80,000 and $100,000.
- If you make $50,000, you could afford a house priced between $100,000 and $125,000.
- If you make $60,000, you could afford a house priced between $120,000 and $150,000.
- If you make $70,000, you could afford a house priced between $140,000 and $175,000.
- If you make $80,000, you could afford a house priced between $160,000 and $200,000.
- If you make $90,000, you could afford a house priced between $180,000 and $225,000.
- If you make $100,000, you could afford a house priced between $200,000 and $250,000.
- If you make $120,000, you could afford a house priced between $240,000 and $300,000.
- If you make $150,000, you could afford a house priced between $300,000 and $375,000.
- If you make $200,000, you could afford a house priced between $400,000 and $500,000.
- etc….

So those are some rough numbers, but…

### Ask Not How Much House, But How Much Mortgage You Can Afford

While a ballpark number is fine to get a rough vision in your head, it is really your monthly mortgage payment that you need to worry about. **How much is the monthly mortgage payment you can handle comfortably, and how much will that monthly payment get you when it comes to the price of a house?**

This is important, because how much house you can afford doesn’t just depend on how much money you make as a salary. Consider these questions:

- How much money do you have for a down payment?
- How much are property taxes in your area?
- Will you have to pay Private Mortgage Insurance (PMI) if your down payment is small?
- How much is home insurance on the property?
- How much monthly debt do you have in addition to the mortgage payment?

Once you consider these questions, you can see that your ability to afford a certain house is going to depend on what the monthly mortgage payment will be, and that amount is going to depend on a lot of factors, with the size of your down payment and other debt obligations being the most important things to consider.

For example, if you were to purchase a home for $200,000 and you put down a down payment of 20%, or $40,000, your mortgage would be $160,000. If your down payment was only 5%, or $10,000, your mortgage would be $190,000.

That $30,000 difference in the overall size of your mortgage would obviously affect the size of your monthly mortgage payment. So, the more you can put down as a down payment, the more expensive of a house you can potentially afford.

### How Much Mortgage Do You Qualify For?

Fidelity Bank has a pretty good mortgage calculator that will give you a rough estimate of how much of a mortgage you might qualify for and how big your monthly payment would be. Note that the calculator will be more effective if you input a real dollar amount for your down payment instead of a percentage (for example, using $40,000 if that’s what you can put down as a down payment is better than saying 20% of a number you haven’t calculated yet).

Using that calculator (or when you get an estimate from a real estate agent or mortgage loan officer), **you might be surprised and excited to see that you can qualify for more house than you would have guessed. But be careful!** Be sure to check out what that means in terms of a monthly mortgage payment and see if that payment feels affordable to you.

For example, if you make $100,000 per year and have a down payment of $20,000, you might be told that you can afford a mortgage of around $260,000 (and a home worth $280,000 once you factor in the $20,000 you’re putting down).

With a mortgage that size, the estimated monthly mortgage payment might be around $2200 or $2300. How do you feel about committing to a monthly payment of that size? That might feel completely comfortable to you, or it might not, in which case you might decide to lower your sights in terms of home prices. Or maybe you’d decide to save up more for a bigger down payment so that you can reduce the monthly payment.

### Try To Avoid Being “House Poor”

**The people who sell real estate and make mortgage loans will often tell you that you can afford A LOT of house based on your income. But they are not the ones who will have to pay down that mortgage each month.**

You don’t want to have so much of your income tied up in keeping up with house payments (and home repairs/projects) that you have very little money to spend on anything else. This is a phenomenon known as being “house poor”, and it’s a bad feeling! Make sure you leave yourself a buffer between what you qualify for and what actually feels manageable. You still want to have a life outside of paying for your new home.

*Author: Adam Jusko*