I Make $90,000 a Year. How Much House Can I Afford?

Featured

Written by:

I Make $90,000 a Year, How Much House Can I Afford?

Earning $90,000 a year puts you in a good position to afford a home priced at around $350,000, as long as you don’t already have significant other debts to pay. That’s good news considering the U.S. average home value these days is just above $342,000. But there are many variables in play that could adjust your budget up or down. Let’s examine them to get closer to your personal housing budget number.

What Kind of House Can I Afford With $90K a Year?

Congratulations! At $90,000 a year, your salary is almost $15,000 higher than the American median household income. It makes sense that you’ve set your sights on homeownership. Making $90,000 per year may feel like a lot of money … or not so much, depending on whether you live in an affordable place. The question is less about how much house you can afford than how much you can afford to spend on housing each month.

There’s a basic rule of thumb that you should spend no more than a third of your gross income (i.e., income before taxes) on housing. (Ideally, you’d spend closer to about a quarter.) So someone earning $90,000 per year, can reasonably afford to spend between $22,500 and $29,700 on housing each year — which translates to between $1,875 and $2,475 per month.

That’s a substantial enough chunk of change to cover many mortgage payments. For example, if you took out a home mortgage loan of $310,000 at an interest rate of 7%, your monthly payment might be around $2,060, which falls into your affordable range. (This assumes you make a down payment of $40,000 on a home priced at $350,000.)

However, more factors than your income affect what size loan mortgage lenders will qualify you for — and more factors than the price of the house itself affect whether or not you can afford it.

What is Debt-to-Income Ratio (DTI) — and Why Does It Matter?

Let’s take a second to talk about DTI, or debt-to-income ratio. Your DTI is, as its name suggests, a ratio of how much debt you currently have to how much income you make. It’s calculated by dividing your debts by your gross monthly income, and it’s one of the factors lenders consider when qualifying you for a home loan.

If you’re in a lot of debt — meaning your DTI is higher — it may be harder for you to qualify for a mortgage, no matter how much money you make. Inversely, if your DTI is lower, that’s a favorable mark even if you’re not making huge amounts of money.

Consider how much debt you currently carry before applying for a home loan. If you’re already paying off a car, student loan, credit card balance or all of the above, you may want to work on dialing down your debt; even if you qualify for a mortgage, your interest rate might be higher as a result.

(Learn more: Personal Loan Calculator

Factoring in Your Down Payment

Along with your DTI and income, mortgage lenders also consider how much money you’re able to pay toward a home up front — otherwise known as your down payment. Although a larger down payment might not significantly shift your monthly payment, it can have an effect on the amount a lender is willing to offer you. (Having a significant amount of money available for a down payment can be a favorable marker for lenders.)

That said, it can take a long time to save up a substantial down payment, even for those earning good income — and you may be sacrificing the opportunity to build equity in the short term if you wait to buy a house.

In any case, remember that responsible homeownership will require a well-set savings habit. (After all, your new home is going to need repairs—and you won’t be able to just call your landlord anymore!)

How to Calculate How Much House You Can Afford

To get the best sense of how much you can afford, consider trying an online mortgage calculator, or home affordability calculator, which will allow you to plug in all of your specific metrics and see how much of a mortgage you’re likely to qualify for (and the size of the associated monthly payment). Keep in mind that your mortgage is just the start. When you buy a house, you’ll also be responsible for any maintenance and upkeep, not to mention property taxes, utility costs, furnishings, and more.

Speaking to a lender is another great way to understand in depth how much house you’re likely to be able to afford based on their algorithm and your specific financial standing.

Home Affordability Examples

Let’s say you earn $90,000 per year and are interested in buying a house that costs $400,000. You’ve saved up $30,000 for a down payment (7.5% of the purchase price of this home), and you have a credit score of 750.

With interest rates around 7%, as they’ve been lately, your monthly payment for such a home would likely be at or above $3,200—in part because, if your down payment is less than 20%, you’ll need to pay for mortgage insurance, which is an additional monthly cost. That’s substantially more than a third of your gross income at $90,000, so it’s probably not a good idea.

So let’s say you take your $30,000 down payment and look at a significantly cheaper home, perhaps in a significantly cheaper state. This one costs $250,000. In that case, with everything else the same, you’d likely pay less than $2,000 per month, which is a comfortable amount for your income level.

Remember that if your credit score and income trend upward after you purchase a home, and you want to improve your mortgage loan terms, you can always look into a mortgage refinance.

How Your Monthly Payment Affects Your Price Range

As you can see, your monthly payment has a huge effect on the price range of the home you’re comfortably able to afford. Although $90,000 per year may seem like a lot of income (and is, at a national level), it may not translate to being able to afford a very large or costly home.

Types of Home Loans Available to Households with $90,000 in Income

Good news: There are many different types of mortgage loans available to those who earn $90,000. Along with conventional loans from private lenders, you may also be eligible for government-subsidized loans like VA loans, FHA loans, or USDA loans, all of which can lower the qualifying requirements and make the home loan process easier for first-time homebuyers.

The Takeaway

Although $90,000 is a large income, especially for a single person, it doesn’t translate to an unlimited home-buying budget. Aside from income, your credit history, DTI, and available down payment amount also have a significant impact on how much mortgage lenders will be willing to offer you.

How to Afford More House With Down Payment Assistance

For many would-be homebuyers — especially first-time homebuyers — the process of saving a downpayment is the single largest obstacle to owning a home. Fortunately, down payment assistance programs offer one way for buyers to give themselves a leg up. Offered through government agencies and nonprofits, down payment assistance programs offer very-low-cost loans or grants that can amplify whatever you’ve already saved up for a down payment.

There are often requirements in order to qualify, such as not out-earning a certain income threshold or having less than a given amount of liquid assets available. Still, these programs can bridge the gap for many first-time buyers trying to leap the down-payment hurdle into homeownership.

Other Factors That Affect Your Ability to Afford a Home

Along with your DTI, the size of your down payment, and the size of the loan you’re hoping to take out, your credit score — and credit history in general — has an impact on your housing budget. Even if you earn good money, a poor credit score may keep you from qualifying for a mortgage, and a score that is fair but not great may push your interest rate higher than it would otherwise be.

Additionally, lenders are interested not only in how much you make, but the stability of your capacity to earn that money. That means they’ll consider not only your job, but how long you’ve had it; most like to see a steady job history of two years. That said, it may still be possible to qualify for a home loan if your job is new to you if you’ve had consistent income over that time, especially if your other markers are favorable.

This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.


SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891  (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

*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.

SoFi On-Time Close Guarantee: If all conditions of the Guarantee are met, and your loan does not close on or before the closing date on your purchase contract accepted by SoFi, and the delay is due to SoFi, SoFi will provide you $2,000.^ Terms and conditions apply. This Guarantee is available only for loan applications submitted after 6/15/22 for the purchase of a primary residence. Please discuss terms of this Guarantee with your loan officer. The property must be owner-occupied, single-family residence (no condos), and the loan amount must meet the Fannie Mae conventional guidelines. No bank-owned or short-sale transactions. To qualify for the Guarantee, you must: (1) Have employment income supported by W-2, (2) Receive written approval by SoFi for the loan and you lock the rate, (3) submit an executed purchase contract on an eligible property at least 30 days prior to the closing date in the purchase contract, (4) provide to SoFi (by upload) all required documentation within 24 hours of SoFi requesting your documentation and upload any follow-up required documents within 36 hours of the request, and (5) pay for and schedule an appraisal within 48 hours of the appraiser first contacting you by phone or email. The Guarantee will be void and not paid if any delays to closing are due to factors outside of SoFi control, including delays scheduling or completing the appraisal appointment, appraised value disputes, completing a property inspection, making repairs to the property by any party, addressing possible title defects, natural disasters, further negotiation of or changes to the purchase contract, changes to the loan terms, or changes in borrower’s eligibility for the loan (e.g., changes in credit profile or employment), or if property purchase does not occur. SoFi may change or terminate this offer at any time without notice to you. ^To redeem the Guarantee if conditions met, see documentation provided by loan officer.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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.

SOHL0124060

More from MediaFeed:

10 Online Banking Alerts You Really Should Turn On

10 Online Banking Alerts You Really Should Turn On

When it comes to managing your financial life, technology can be your friend. By toggling on banking alerts, you can stay on top of your bank accounts and possibly avoid such issues as overdraft, late fees, and unauthorized use of your banking details.

Setting up automated alerts can be quick and easy, but you may need help knowing which are the right ones to use to suit your needs. Here’s a guide to 10 of the most valuable online banking alerts that you may find useful.

Thapana Onphalai/istockphoto

Mobile banking alerts are typically alerts sent by email and/or text that keep you updated on the status of your accounts. They can share important information about your finances (such as, say, you are about to overdraft your account) or they can help protect your account by informing you of a new log-in.

In many cases, you can customize how you want to receive mobile banking alerts, whether by email, text message, and/or push notification. You can also personalize the alerts. For example, one person might want a low balance alert when their account balance falls under $200, while another person might want to be notified when their account gets down to $25.

AaronAmat/istockphoto

These alerts can help keep your bank account safe online and protect your financial status in the following ways:

  •    Allow you to monitor your banking activity
  •    Help you avoid unauthorized activity
  •    Prevent scams and fraud
  •    Alert you to low balances so you can steer clear of overdraft and related fees
  •    Help you manage debit card purchase behavior
  •    Know when an important payment or debit is made
  •    Feel more in control and secure of your finances.

Ridofranz/ iStock

Here are 10 important mobile banking alerts. See which ones might suit your particular situation and needs.

1. Low Balance

Cars have gas lights to warn drivers when fuel is close to empty, so why shouldn’t bank accounts?

  • A low balance alert lets you know when funds have dipped below a predetermined amount—it could be $20, $1,000, or any amount you set. This can help keep you from overspending and triggering expensive overdraft fees.
  • When you receive an overdraft alert, you can then decide if you want to transfer money into your account or hold off on making a purchase until your next paycheck clears. You can potentially avoid having a negative bank balance.

Liubomyr Vorona/istockphoto

Constantly checking your account to see if your paycheck has been deposited can be a nuisance, particularly if you only recently set up direct deposit (which can take one or two pay cycles to get going).

If you sign up for a direct deposit notification, however, you’ll know exactly when money sent electronically to your account has been deposited and is ready to use.

Being notified of direct deposits each paycycle can also help you make sure that your employer is paying on time and that you have enough money in your account to cover bills and automatic expenses.

ArtistGNDphotography/istockphoto

Unfortunately, millions of people report fraud and identity theft to the Federal Trade Commission (FTC) each year.

Setting up an unusual activity mobile account alert can save account holders a lot of headaches, as well as time and money, should their accounts ever become compromised.

An unusual activity alert notifies consumers when there’s a change in their account status that’s outside the norm. For example, if a large amount of money gets transferred out of the account all at once and this is something that rarely occurs, you would receive an unusual activity alert.

Or, an alert might let you if purchases are being made outside your typical travel area.

By alerting you the moment a potential fraud takes place, you can take action quickly, report the transaction, or even freeze your account.

SolStock/istockphoto

Another helpful way to protect your accounts against bank fraud and theft is to set up a new log-in account alert.

This alert lets you know when someone has logged into your account from a computer or device that has never been used to access your account before.

If you weren’t the one logging in, you can possibly stymie the fraudster by immediately changing your password and even freezing your account to prevent spending.

Some financial institutions also allow customers to set up multifactor authentication on their account (which requires users to provide multiple pieces of identifying information, not just a username and password to access an account), which can even further protect your money.

Tero Vesalainen/istockphoto

Some banks allow users to set up a customizable large purchase alert. With this kind of online banking alert, you will usually receive a message whenever a purchase over a certain dollar amount (which typically you determine) is about to be charged to your account.

If you see the alert and don’t recognize the purchase, you may then be able to block the transaction.

Having a large purchase alert set up can help prevent fraud, but also human error. If a restaurant server accidentally adds an extra zero to a dinner bill, a large purchase alert could go off. That could save you the hassle of reporting the purchase later and trying to have it reversed.

This mobile bank alert may be especially helpful if you are not in the habit of monitoring your bank account on a regular basis.

Pablo Rasero/istockphoto

If you overdraw your account using a check or debit card, your bank might allow the transaction, letting you spend more money than you actually have in your account.

Typically, this comes with a price — an overdraft or NSF fees (which can often exceed $35). And, if you don’t realize you’re overdrafting your account, you might continue to make purchases, and incur a fee on each one.

Depending on the bank, if your account remains in a negative balance for an extended number of days, your account could even be closed.

To avoid these problems, If you get an overdraft alert, you may want to:

  • Add money to your account as quickly as possible to prevent any more overdrafts. If you move quickly, you might possibly be able to avoid the first overdraft fee (check if your bank has a deadline to deposit money that might help you avoid an overdraft fee).
  • Some banks have no overdraft fees up to a certain dollar amount; check and see if yours offers this feature.

BongkarnThanyakij/istockphoto

Profile change bank alerts notify you if someone has tried to change your password, username, or any personal information in your profile, such as contact information or opting out of bills through mail.

If you see something was changed and you didn’t make the changes, you’ll likely want to change your password ASAP and alert the bank to help protect your account.

VioletaStoimenova/istockphoto

Setting an alert for withdrawals from an ATM or debit card lets a person know when cash has left their account.

This might be helpful in the event that there are multiple authorized users on the card (so you are aware of a change in the account balance) but also if the card has been stolen.

According to the FTC, the maximum loss for a person who reports their card as lost within two days of discovery is $50. That means even if a thief steals a debit or ATM card and wipes out the account’s balance, the account holder would not be out more than $50.

If a person doesn’t notice their ATM or debit card has gone missing, a withdrawal notification could be the first thing to alert them.

Drazen Zigic/istockphoto

This kind of alert clues you in to debit card transactions. It can tell you in real time about your debit card’s usage. It can be especially helpful as it can indicate when someone is using a debit card online that belongs to you.

If this is an unauthorized transaction, you can take action to contact your bank and freeze your account as needed. Remember, if you report misuse of your card number within two days of the event, you are not liable for more than $50, per the Electronic Funds Transfer Act. In this way, online banking activity alerts could help you avoid having to pay for fraudulent charges.

(Learn more: Personal Loan Calculator

Sitthiphong/istockphoto

An upcoming payment alert can be a good way to stay posted on recurring or one-time scheduled payments. For instance, if you had scheduled a payment of a medical bill a couple of weeks ago to happen right now, the alert could nudge you to check your balance and make sure you’re in good shape to cover the expense.

Or an upcoming payment alert could remind you that you are paying for, say, a streaming channel you haven’t been watching and you might decide to cancel and save some money.

insta_photos/istockphoto

If you receive a mobile banking alert or bank notification, you may or may not need to take action.

  • If the message tells you something you already knew or expected (say, that you received your paycheck or your mortgage was paid per your instructions), no action is needed.
  • If you receive an alert that your bank account is low and/or you are tisk of overdraft, you can transfer funds to avoid problems and fees.
  • If you are informed that a transaction or log-in occurred that you do not recognize, you can (and should) alert your bank’s customer service ASAP to avoid fraudulent activity and consequent issues, such as identity theft. In addition, you may want to change passwords or freeze your account.

ipopba/istockphoto

Online banking alerts can help you manage your financial life more conveniently. Automatic bank alerts can provide you with important and timely account information, such as when your account balance falls below a certain amount or when your paycheck has been electronically deposited.

This can help you keep track of your account and your spending, as well as avoid costly overdraft fees. They can also notify you right away if there’s unusual activity on your account, which can help you resolve any fraudulent activity on your account. Setting up alerts is a personal decision and can be changed as your needs evolve.

This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.

SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2023 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.

SoFi members with direct deposit activity can earn 4.60% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a deposit to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate.

SoFi members with Qualifying Deposits can earn 4.60% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant.


SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY.


 Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.60% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.


SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 10/24/2023. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

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.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

Nattakorn Maneerat/istockphoto

Prostock-Studio/istockphoto

Featured Image Credit: iStock.

AlertMe