How Much House Can I Afford Making $150,000 a Year?

By Kevin Brouillard · February 08, 2024 · 8 minute read

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How Much House Can I Afford Making $150,000 a Year?

With a $150,000 salary, you could afford a home priced around $415,000-$430,000, assuming you have $20,000 saved up for a down payment and are carrying some monthly debt already, such as a car payment or student loan. This also assumes an interest rate of 7%.

As you can see, your homebuying budget depends on more than just your salary, including your personal financial situation, the mortgage rate you qualify for, and the loan type. Here’s a closer look at the key considerations that impact home affordability, plus guidance on calculating how much house you can afford.

What Kind of House Can I Afford With $150K a Year?

You may have heard the age-old adage: location, location, location. The type of house you can afford on a $150,000 salary will depend on where you’re looking to buy. Besides differences in cost of living by state, prices can also vary at the neighborhood level.

Your personal finances — not just income — matter, too. Lenders will assess your credit score, debt, assets, and ability to make a down payment to determine what kind of home mortgage loan you qualify for, which helps determine your homebuying budget.

Recommended: Best Affordable Places to Live in the U.S.

First-time homebuyers can
prequalify for a SoFi mortgage loan,
with as little as 3% down.

Understanding Debt-to-Income Ratio

Your debt-to-income (DTI) ratio represents the percentage of your gross income that goes toward debt payments. It’s calculated by dividing all your monthly debts — such as student loans and credit card debt — by your gross monthly income.

Lenders consider a borrower’s DTI ratio to determine whether they qualify for a home loan and at what interest rate. A DTI ratio of 36% or less is recommended for homeowners, though the maximum DTI ratio varies from lender to lender and between mortgage types.

If earning $150,000 a year, your gross monthly income is $12,500. To have a DTI ratio of 36% or less, your total debts, including the mortgage, would need to be at or below $4,500.

Some lenders may assess both your front-end and back-end DTI ratios, using what is known as the 28/36 rule. In this scenario, lenders usually look for housing costs to top out at 28%. This comes out to $3,500 in monthly housing costs on a $150,000 salary.

Meanwhile, back-end DTI covers all recurring debt payments. Lenders typically prefer a back-end ratio of 36% or less.

💡 Quick Tip: Not to be confused with prequalification, preapproval involves a longer application, documentation, and hard credit pulls. Ideally, you want to keep your applications for preapproval to within the same 14- to 45-day period, since many hard credit pulls outside the given time period can adversely affect your credit score, which in turn affects the mortgage terms you’ll be offered.

How to Factor in Your Down Payment

The required down payment amount depends on the type of home loan. But how much you can put toward a down payment impacts how much house you can afford. The more you can put down upfront, the less you’ll need to borrow, which means lower monthly payments and less interest paid over time. Having a larger amount saved for a down payment could also increase your housebuying budget.

That being said, a down payment shouldn’t wipe out your savings. It’s important to account for home repairs and ongoing housing costs when deciding how much money to put down.

Recommended: Do You Still Need to Put a 20% Down Payment on a House?

Factors That Affect Home Affordability

There are several factors that affect home affordability in addition to DTI ratio and down payment. Lenders will consider a borrower’s credit score to determine their ability to repay a mortgage loan. The higher your credit score, the better your chance of qualifying for a lower interest rate and favorable loan terms.

How you plan to finance your home matters, too. The minimum credit score, down payment requirement, and DTI ratio all vary by home loan type.

Besides your personal finances, prevailing mortgage rates have a major effect on home affordability. Higher interest rates increase monthly payments and the overall cost of borrowing. The National Association of Realtors® estimates that mortgage interest rates will average 6.3% in 2024. This represents a significant rate drop from 2023 when interest rates exceeded 7% for the majority of the year.

Home Affordability Examples

Here’s a look at a couple home affordability examples that show how the amount of debt you carry could affect your home affordability budget.

As noted above, according to the 28/36 rule, you can afford a maximum monthly mortgage payment of up to $3,500 and total monthly debt payments of up to $4,500 if earning $150,000 a year.

A borrower with $1,000 in monthly debt and $50,000 saved toward a down payment could afford a $500,000 house, or a monthly payment of $3,391, assuming a 5% interest rate and average property taxes and insurance costs.

Meanwhile, a borrower with $2,000 in debt could only afford a monthly mortgage payment of $2,500. In this scenario, a borrower could afford a house of nearly $400,000 with a $50,000 down payment and holding other variables constant.

How to Afford More House With Down Payment Assistance

According to the National Association of Realtors®, the average down payment in 2023 was 8% for first-time homebuyers and 19% for repeat buyers. This can translate to a hefty sum, especially in more expensive housing markets. If you’re facing challenges coming up with a down payment, you’re not alone. Buyers can consider down payment assistance programs to help get a mortgage.

Down payment assistance programs are offered by the federal government, state and local government, and nonprofit organizations. Assistance is available in the form of grants, low-interest loans, or forgivable loans to help buyers make a down payment.

This assistance typically comes with eligibility requirements for the homebuyer and property. For example, applicants may need to meet household income limits or be a first-time homebuyer to qualify. Assistance programs are usually intended for primary residences, and buyers can be required to live in the home for a minimum timeframe.

Recommended: Tips to Qualify for a Mortgage

How to Calculate How Much House You Can Afford

Still wondering, “I make $150,000 a year, how much house can I afford?” You’ll need your total monthly debt, estimated down payment, and interest rate to calculate how much house you can afford.

Rather than crunching the numbers yourself with the 28/36 rule, use a home affordability calculator or mortgage calculator to easily experiment with different scenarios. Prospective homebuyers can also get preapproved for a home loan to get an idea of how much they can afford. Getting preapproved also shows sellers that you’re a serious buyer and provides some assurance that your financing won’t fall through.

How Your Monthly Payment Affects Your Price Range

Lenders consider your ability to afford monthly mortgage payments when determining how much you qualify to borrow. Mortgage payments consist of four components: principal, interest, taxes, and insurance.

The principal refers to the loan balance, while the interest is the amount (expressed as a percentage) that’s charged on the principal by the lender for issuing the loan. Real estate and property taxes can be lumped into monthly mortgage payments. These costs vary considerably by the property’s location and assessed value, ultimately impacting your home price range.

Home insurance that protects the property from fire, theft, floods, or other disasters is sometimes included in a monthly payment. And if you put less than 20% down on a house, you’ll have to pay private mortgage insurance (PMI), which increases your monthly payment. However, it’s possible to get out of PMI down the line when you hit 20% equity or with a mortgage refinance.

💡 Quick Tip: Lowering your monthly payments with a mortgage refinance from SoFi can help you find money to pay down other debt, build your rainy-day fund, or put more into your 401(k).

Types of Home Loans Available to $150K Households

Households making $150,000 a year have multiple financing options. Qualifying for different types of mortgage loans depends on credit score, down payment, and other borrower characteristics. Here are some common home loan options for $150,000 households to consider:

•   Conventional loans: The most common type of mortgage, conventional home loans usually require a 620 credit score and may offer down payments as low as 3%.

•   FHA loans: This loan backed by the Federal Housing Administration offers competitive interest rates and a down payment of 3.5% for qualified first-time buyers with a credit score of at least 580.

•   United States Department of Agriculture loans: There’s typically no down payment or credit requirements, but borrowers must meet income eligibility and a property must be in a USDA-designated rural area.

•   VA loans: Active-duty service members, veterans, reservists, and surviving spouses can get a low-interest loan from the U.S. Department of Veterans Affairs with no down payment requirement.

Check out a home loan help center to dive deeper into mortgage basics and the homebuying process.

The Takeaway

If you make $150,000, how much house you can afford depends on several factors, including your DTI ratio, credit score, loan type, savings for a down payment, and location. After figuring out your personal homebuying budget, it’s time to start shopping for a home loan.

Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.

SoFi Mortgages: simple, smart, and so affordable.


Is $150K a good salary for a single person?

A $150,000 salary is more than double the national average wage in 2022 of $63,795. Therefore, a single person making a $150,000 salary can likely afford a more expensive home than most.

What is a comfortable income for a single person?

Generally speaking, a comfortable income for a single person should exceed the cost of living in your area. For example, the annual cost of living in California is $53,082 versus just $39,657 in Alabama.

What is a liveable wage in 2024?

Americans in most states need to earn between $15 and $20 an hour for a liveable wage in 2024. However, a liveable wage in urban areas of states such as California, New Jersey, New York, and Virginia is considerably higher.

What salary is considered rich for a single person?

When surveyed, Americans report needing to earn about $483,000 to feel rich. In reality, though, a salary of $234,342 would put you in the top 5% of workers.

Photo credit: iStock/zamrznutitonovi

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*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.

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.
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