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The answer to this question depends on a variety of factors, including your income, debt, credit score, and the location you’re looking to buy in. However, with a $100k salary, you’re in a good position to start your homeownership journey.
Here’s a breakdown of what you can expect:
Income:
- $100k salary: This is a good starting point for buying a house, especially if you have a low debt-to-income ratio and good credit.
- 28/36 rule: According to this rule, you shouldn’t spend more than 28% of your gross income on housing and no more than 36% on total debt. This means you can afford a monthly mortgage payment of around $2,333.
- Down payment: Aim for a 20% down payment to avoid private mortgage insurance (PMI). This means you would need $80,000 for a $400,000 house.
Debt:
- Debt-to-income ratio (DTI): Lenders prefer a DTI of 36% or lower. If you have high-interest debt, consider paying it off before buying a house.
- Credit score: A higher credit score will qualify you for a lower interest rate, saving you money on your monthly payments.
Location:
- Cost of living: Your dollars will go further in less expensive markets. Consider your desired location and adjust your budget accordingly.
- Starter home: If you’re not ready for your forever home, consider a starter home to build equity and get your foot in the door.
Financing options:
- Pre-approval: Get pre-approved for a mortgage to understand your borrowing power. This will help you set a realistic budget.
- Loan types: Explore different loan options like conventional, FHA, VA, and USDA loans.
- First-time homebuyer programs: Some programs can help with down payment or closing costs.
Additional factors:
- Savings: The more you can save for a down payment, the better.
- Closing costs: Budget for closing costs, which can be 2-5% of the purchase price.
- Real estate agent: Find an experienced local agent to help you navigate the market.
Here are some resources to help you decide:
- Bankrate: How Much House Can I Afford With A $100K Salary?
- Quora: If I have $100,000 dollars, should I buy a house or invest it?
Remember, patience is key. If you’re not quite ready to buy, consider building your savings and credit score before taking the plunge.
Here are some additional tips:
- Set realistic expectations: Don’t expect to buy a mansion on a $100k salary.
- Be prepared for unexpected costs: Factor in repairs, maintenance, and property taxes.
- Get professional advice: Talk to a financial advisor or mortgage lender for personalized guidance.
Buying a house is a big decision, but with careful planning and the right resources, you can achieve your dream of homeownership.
Start with the 28/36 rule
As a baseline for your budget, aim to follow the 28/36 rule. According to this widely accepted recommendation, your housing costs should not exceed 28% of your income, and your total debt payments should not exceed 36% of it.
If you’re earning $100,000 per year, your average monthly (gross) income is $8,333. So, your mortgage payment should be $2,333 or less. The remaining debts, including credit card payments, student loans, auto loans, and any other amounts you’re trying to pay off, shouldn’t add up to more than $667 each month after that. So, the 36 percent in the equation should be no more than $3,000.
But, there are a lot of other factors to take into account, such as the amount of money in your savings account, the cost of homeowners insurance, and property taxes.
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If you’re earning $100,000 per year, congratulations on entering six-figure salary territory. However, if you’re an aspiring homeowner, even this princely sum may not seem like enough.
A recent PYMNTS/LendingClub survey found that 49 percent of people who make $100,000 or more are still living paycheck-to-paycheck. That’s despite the fact that $100,000 is a good salary, significantly higher than the national median household income of $70,784, according to the most recent Census data.
Even with a $100,000 salary, purchasing a home can seem like a difficult goal to achieve given the recent high rates of inflation and rising mortgage rates. But it’s not impossible. Here are some considerations to help you determine how much house you can afford.
How Much Home You Can ACTUALLY Afford (By Salary)
FAQ
What house can I afford with 100K?
Is 100K enough to put down on a house?
Can you buy a house with $100 000 dollars?
How big of a house can I build with 100K?