What House Can I Afford on 50K a Year?

Are you looking to buy a house? Confirm your home affordability if you are making $50,000 a year in salary.

Buying a house can be a big step for most people. In fact, it’s one of the biggest financial decisions you’ll probably make. You might think that you have to make six figures to even afford a home these days, but that’s not true. Owning your own home is possible, even with a $50,000 annual salary.

In this article, we’ll show you how much house you can afford on $50K per year. The numbers will vary depending on a variety of factors, but the end result is still the same: you own a home!

We’ll also provide suggestions on how you can improve your home buying power, even if you only bring home 50K a year. Are you ready to see how much house you can afford on $50,000 a year?

How Much House Can You Afford on a $50K Salary?

With a $50,000 annual salary, it’s possible to own a home in the $200,000 to $300,000 range. You may be able to afford a house that’s just over $300,000 as well, depending on how your finances sit.

That’s the short answer. The long answer is that you may need to compromise on a few aspects of your dream home, especially in this competitive market. However, a pre-approval is something you can use to determine your actual home budget with your finances where they stand.

When you want to buy a house with a 200k mortgage or more, it’s a huge deal, so it’s wise to find the best mortgage lender to help you do that. We recommend shopping for offers from at least three different lenders to find the best rate.

You can compare mortgage rates and other loan terms (fees, time to close, customer service offerings) and choose the best fit for you. Taking the time to do your research can really pay off big, I’m talking about thousands of dollars over the life of the loan.

To help you choose the best mortgage lender, Credible offers an online easy application to help you get a home loan with the best terms.

With Credible's lending marketplace, you can fill out a simple, streamlined form, and instantly see which lenders you prequalify for and at what rates. These are personalized, prequalified rates based on your credit history. Checking your prequalified rates with Credible will not affect your credit score.

Get your personalized prequalified rates on Credible
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If you’re not satisfied with the numbers you receive from your pre-approval, there are a few variables you can change to improve them. Most of them involve taking a good look at your budget and really buckling down on debt.

Factors That Determine Your Overall Home Buying Budget

Knowing what goes into the qualification process for buying a home is key to maximizing your buying power.

Here are some of the key factors you’ll want to optimize in order to afford as much house as possible on your $50,000 annual salary:

  • Credit score: Your credit score gives lenders a quick glance into your financial habits. If you need a quick boost, it would be helpful to use a credit building app to help identify your problem areas and improve your credit score.
  • Interest rate: The Federal Open Market Committee (FOMC) sets the national interest rate, but the interest rate you qualify for is largely based on your credit score.
  • Salary: We’ve set the salary at $50,000 annually for this article, but that doesn’t mean you have to stick to that number. Increasing your salary can help increase the amount of house you’re able to afford.
  • Savings: Additional cash works greatly in your favor. You can put your savings towards a down payment, or even use part of it for closing costs.
  • Monthly debts: The more financial commitments you have each month, the harder it is to set aside money for a mortgage payment.
  • Debt-to-income (DTI) ratio: This is one of the most important numbers in your financial portfolio when it comes to buying a home. Ideally, you should spend no more than 28% of your gross income on housing (also known as the front-end ratio) and no more than 36% of your gross income on debt (back-end ratio).
  • Down payment: Putting down more money up-front will bring down your overall loan amount, but you don’t always have to smack down 20% to qualify.
  • Loan term: Most homeowners choose a 30-year loan to spread out payments, but you can choose a 15-year loan in most cases as well.

In many ways, these factors are all interconnected when it comes to your personal finances. For instance, there are factors you can control to sway in your favor. You can increase your savings for a larger down payment and decrease your monthly debts to further improve your debt-to-income ratio.

However, interest rates and the available loan terms might not be something you can control. That being said, a higher credit score can open the door to a lower interest rate, and/or even better loan terms.

Additional Home Buying Costs You Should Account For

When you buy a car, it’s important to determine if you can afford the cost of maintenance in addition to the cost of the car itself. The same principle applies to buying a home.

There are other associated costs that go with buying and owning a home that you should account for before you make a purchase. Here are a few to budget for.

Homeowner’s Insurance

Natural disasters such as fires, tornados, floods, and hurricanes can wipe out your home and leave you without shelter. Homeowner’s insurance protects you against losing your investment, no matter if it’s a windstorm that blows your roof off to a tree that falls onto your garage.

The cost of homeowner’s insurance will vary based on your location. Check with your local insurance agent to see what common rates are for the area to get a better idea of what you should budget for.

Property Taxes

On top of the many taxes you pay already, property taxes are an annual tax based on a percentage of your home’s value. This value is determined by an appraisal. Most states have a property tax, although some are higher than others.

Homeowners Association (HOA) Fees

Becoming a homeowner can often mean joining a homeowner’s association, or HOA. Typically these HOA fees are used to support communal amenities, such as clubhouses, tennis courts, swimming pools, and more.

If you’re considering a property, ask about HOA fee rates as well as what they cover. For example, you may save a gym membership fee if you’re able to work out at the clubhouse, so working HOA fees into your budget may work in your favor.

Private Mortgage Insurance (PMI)

If you can’t afford a 20% down payment, chances are your lender will require you to obtain private mortgage insurance. This monthly expense is literally insurance for the lender to ensure they minimize their losses if you were to default on the loan. 

Most PMI rates are below 5% of the loan balance. You only need to continue paying PMI until you’ve stored up enough equity in the home that you no longer pose a risk to the lender.

Closing Costs

Like many of the costs associated with buying a home, closing costs are a percentage of the home price, of which buyers typically pay the lion’s share. Depending on what you’ve negotiated with the seller, they may pay part or all of the closing costs as well.

You should budget a few thousand dollars for closing costs, as they’re typically anywhere from 3%-6% of the home price. Closing costs include taxes, any application fees, the appraisal, courier fees, attorney fees (if applicable), and various inspection fees, to name a few. You’ll also likely have to pay for a year’s coverage of homeowner’s insurance as well.

Maintenance and Repairs

Depending on the home you purchase, you may or may not need to make repairs immediately before moving in. However, every home requires maintenance and repair at one point or another in its lifetime.

Budgeting for maintenance takes into account what features of the home may need maintained, repaired, or replaced. That’s not to say you have to set aside $1,000 per month or more in order to replace the furnace or water heater, but those expenses are something you should be creating an emergency fund for in case they do break.


Paying for water, sewer, trash, and electricity is part of the cost of living. Most potential home buyers are aware of how much these utilities cost per month at their current location.

However, there’s a huge difference between heating a small apartment and keeping an entire house at a comfortable temperature. Water, sewer, and trash are typically folded into rent, but they’re separate charges once you own a home.

Home Buying Calculators

There are a lot of numbers and rates to work with when it comes to owning a home. If you’re someone who would rather plug some numbers into a program and hit “go” to find out what your monthly payment is or how much house you can afford, there are calculators for that.

Calculators allow you to plug in factors such as location, income, savings, monthly debts, and more in order to figure out how much you can afford in your area. Additional expenses such as down payment and closing costs are included, as well as an interest rate set based on your credit score. 

To edit your assumptions, you can click below to use the mortgage calculator:

Click Here to Use Mortgage Calculator

How You Can Improve Your Home Buying Budget

After hearing about how much a home can really cost you, the enormity of it all might start sinking in. But you should know that there are ways you can improve your home buying budget without having to jump through a lot of hoops.

Here are a few ways you can increase how much house you can afford:

  • Increase down payment: As long as your finances allow you to afford the monthly mortgage payment, you can increase the price range of your soon-to-be home if you are able to put down a higher down payment. You may even be able to forego private mortgage insurance if you put down 20% or more, saving you that additional fee in the long run.
  • Pay down debt: We spoke of your debt-to-income (DTI) ratio in a previous section. Decreasing the amount of debt you have can help boost this number, which helps you to qualify for more house since you’re spending less on monthly expenses.
  • Cut unnecessary expenses: Speaking of expenses, cutting expenses may be the best thing you do if you’re looking to buy a home. If you can give up that extra Starbucks drink or even a streaming service you don’t use all that often, your new home could be closer than you thought.
  • Look into first-time home buyers’ programs: There are many programs out there for first-time home buyers to take advantage of. These programs are designed to support your chances in some way to increase your ability to qualify for a home loan.
  • Consider an FHA or VA loan: VA loans are limited to members of the military and their families, but FHA loans can be a huge help if you’re looking to qualify for a home of your own.
  • Improve your credit score: There are many ways you can improve your credit score, many of which include paying down debt. You can also use less than a third of your credit card limit to boost your score as well.
  • Use a piggyback loan: If qualifying for a home loan doesn’t get you to the magic number you need to make the home of your choice possible, you can potentially use a piggyback loan to make up the difference.
  • Negotiate with the seller: Opening communication between you and the seller doesn’t just mean you only exchange offers. You can also negotiate with them when it comes to repairs, closing costs, and more.
  • Consider buying a multi-family home: While most people might be expecting to buy a single-family home, there are benefits to buying a home that can house multiple families. For instance, you could live in one part of the house and rent out the rest of it, thereby supplementing your income in order to pay your mortgage.

Some of these methods may be available to you and some may not. Any way you can make your finances look better or take advantage of resources available to you will help you afford a house you can not only own, but also enjoy as well.

50K Can Afford You the American Dream

We hope this article has helped you to see that earning even just $50,000 a year can qualify you for owning a home. That doesn’t mean you have to have a stellar credit score either. As long as you play your financial cards right, the opportunity to own your own home is there.

Plus, there are plenty of programs you can take advantage of as well to help boost your chances of achieving the American Dream. That house you’ve been wanting to call your own could be a lot closer than you thought.

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Brian Meiggs
Brian Meiggs
Brian Meiggs is a personal finance expert, and the founder of Smarts, a personal finance site helping you easily explore your best money options. He helps readers follow the smart money in order to increase their earning potential and start building wealth for the future. He regularly writes about side hustles, investing, and general personal finance topics aimed to help anyone earn more, pay off debt, and reach financial freedom. He has been quoted as a top personal finance blogger in major publications including Business Insider, Yahoo! Finance, NASDAQ, Discover, and more.
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