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I Make $80,000 a Year. How Much House Can I Afford?

By Jamie Cattanach · February 08, 2024 · 8 minute read

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I Make $80,000 a Year. How Much House Can I Afford?

An $80,000 annual salary would allow you to purchase a home priced up to around $300,000 — that is, if you follow the conventional guidance, which is that you spend no more than a third of your pretax income on housing costs. But there’s more (lots more) to it than that.

By just about any measure, earning $80,000 a year is a good salary. It’s about $5,000 higher than the U.S. median household income, per Census data. But depending on where you live and other aspects of your financial profile, earning a good salary doesn’t always translate into being able to afford a large house — or, in some expensive cities, any house at all.

So how can you tell where you stand? Let’s dig into the details.

What Kind of House Can I Afford With $80K a Year?

As noted above, one basic rule of thumb is to spend no more than about a third of your income on housing — and ideally even less. That means that if you earn $80,000 per year, you should spend about $26,000 per year on housing.

That translates to roughly $2,200 per month, which should cover not only your mortgage payment but also utilities, home insurance, and other housing-related expenses.

However, as you’ve probably noticed, this still isn’t a straightforward answer; the size of your monthly mortgage payment doesn’t directly translate to the overall cost of the house. Other factors like your interest rate, debt-to-income ratio, and the size of your down payment all factor in — so let’s take a closer look at those.


💡 Quick Tip: SoFi’s Lock and Look + feature allows you to lock in a low mortgage financing rate for 90 days while you search for the perfect place to call home.

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


What is Debt-to-income Ratio (DTI)?

Your debt-to-income ratio, or DTI, is a measure of how much money you pay toward your debts each month relative to how much free cash you have available. It’s determined by dividing the sum of your monthly liabilities (i.e., credit card bills and student loan payments) by your gross monthly income.

If you are already paying quite a bit toward debt every month, you’ll have less money to spend on housing. (For example, someone earning $80,000 a year who is already paying $1,400 per month toward debt can likely only afford a house priced around $200,000.)

The higher your DTI, the riskier you appear to mortgage lenders — which may drive up your interest rate and, therefore, your monthly payment. And above a certain DTI level (usually around 40%, but sometimes as high as 50%), a mortgage lender might disqualify you from borrowing entirely. That’s why it’s often a good idea for would-be homebuyers to drive down their overall debt before moving seriously into the housing market.

Factoring in Your Down Payment

Along with how much debt you have, lenders also consider how much money you’re ready to put down for your home up front — otherwise known as your down payment. Generally speaking, the larger your down payment, the more house you can afford, since having so much money saved up is a favorable factor for home lenders. (Even if you keep your budget modest, having a larger down payment can help you save money over time since the amount you’ll be borrowing will be proportionally smaller.)

How Down Payment Assistance Can Help

Saving up a down payment can be one of the most challenging parts of the home-buying process, especially for first-time homebuyers. Fortunately, down payment assistance programs can help buyers overcome this hurdle — though keep in mind that the assistance itself is often a loan, which also needs to be repaid over time. Often, the interest on such loans is very low, making it a more viable option for homebuyers already struggling to get their foot in the door.

You may also need to prove financial need in order to qualify for down payment assistance for your mortgage. For example, you may have to be at or below a certain income threshold or have less than a given amount of liquid assets at your disposal to be eligible for down payment assistance.

Down payment assistance is offered through local governments, federal government bodies, and some nonprofits. If the prospect of saving a substantial chunk of money is blocking you from the home you hope to afford, it’s worth shopping around to see what kind of assistance is available.

Other Factors That Affect Home Affordability

Along with your current level of debt and how much of a down payment you’ve saved up, other factors affect how much home you can afford — and how affordable your city is, for that matter.

On your end, factors like your credit score and credit history, along with your job history and security, may increase or decrease your eligibility for a home mortgage loan (and, if you qualify, affect your interest rate). And as far as the affordability of homes themselves, where you live has a major impact, along with the size, type, age, and repair level of the homes you’re shopping for.

How Your Monthly Payment Affects Your Price Range

As mentioned above, figuring out how much house you can afford is all about figuring out how much you can afford to spend on housing each month. The higher the monthly payment you can comfortably afford, the larger the overall mortgage you can afford, which means you may be able to buy a higher-priced home. That said, it’s important to keep in mind that your mortgage is just the beginning.

Along with all of your other existing expenses — like car payments, student loan bills, utilities, groceries, and gas — owning a home can also increase the amount you spend on home maintenance relevant to renting. That’s because, once you’re a homeowner, when something breaks in your house, it’s your responsibility to fix it.

Most homes come with a variety of maintenance issues that need to be addressed at some point after purchase; sometimes, appliances break. Just be sure you’re not putting yourself in a position where your monthly mortgage payment is so high, you won’t be able to afford the other expenses that come along with homeownership.

How to Calculate How Much House You Can Afford

Use a housing affordability calculator to determine how much house you can afford based on your income, your current debts owed, your credit score, the size of your down payment, and your expected interest rate. (You can get a better sense of what, exactly, your interest rate might be by chatting with an agent from your home lender; they’ll also be able to give you an idea, given your financial profile, of how much house you can afford.)

Types of Home Loans Available to $80K Households

Fortunately, many different types of mortgage loans are available to households making $80,000 per year. For example, if you’re a first-time buyer, you may qualify for an FHA loan from the Federal Housing Administration, which allows you to buy with lower down payments and closing costs as well as less-stringent credit requirements.

Veterans and their families might look into VA loans. The U.S. Department of Veterans Affairs makes it possible to purchase a home with no down payment at all if you’re qualified.

And, of course, conventional home loans from private lenders are also available to those earning $80,000 — or most any amount.


💡 Quick Tip: Active duty service members who have served for at least 90 consecutive days are eligible for a VA loan. But so are many veterans, surviving spouses, and National Guard and Reserves members. It’s worth exploring with an online VA loan application because the low interest rates and other advantages of this loan can’t be beat.†

The Takeaway

As a $80,000 earner, chances are you can afford to purchase property — but the specifics depend on a wide variety of factors including your other markers of financial health as well as where you’re trying to buy. Using an home affordability calculator is a smart way to start exploring what your budget will allow before you embark on a search for a home and a home mortgage 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.

FAQ

Is $80K a good salary for a single person?

$80,000 is about $5,000 higher than the U.S. median household income, so many people would consider it very good for a single person. “Good” is always a relative term when it comes to salary; whether or not the amount you earn covers your expenses is a highly personal dynamic.

What is a comfortable income for a single person?

Comfortable depends on where you live and your personal habits. A single person in San Francisco would need about $55,000, while the same person living in Cincinnati, Ohio, could get by on around $32,000, according to MIT’s Living Wage Calculator.

What is a liveable wage in 2024?

Living wage calculations are dependent on where you live and the cost of living in that area — along with factors like the size of your family and how many people in your household are working. Living wage calculators exist online that can help you better determine the living wage in your area.

What salary is considered rich for a single person?

People have so many different definitions of “rich.” If you’re settled in an area with a low cost of living, $100,000 might make you rich; in expensive cities, even a six-figure salary may only feel middle-class.


Photo credit: iStock/PIKSEL

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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.

+Lock and Look program: Terms and conditions apply. Applies to conventional purchase loans only. Rate will lock for 91 calendar days at the time of preapproval. An executed purchase contract is required within 60 days of your initial rate lock. If current market pricing improves by 0.25 percentage points or more from the original locked rate, you may request your loan officer to review your loan application to determine if you qualify for a one-time float down. SoFi reserves the right to change or terminate this offer at any time with or without notice to you.

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.
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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.

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