How Much House Can I Afford On $80K?

If you're looking to buy a home, you're naturally curious about how much house you can afford on your salary. If you're earning $80,000, you have solid potential to become a homeowner in many housing markets across the country.

Your annual income is important, but it's just one piece of the puzzle. Other factors influence home affordability, and there are different options to become a homeowner. We'll break down everything you need to know in this guide.

The Answer: Between $240,000 and $360,000 

On an $80,000 salary, you'll likely be able to afford a house between $240,000 and $360,000. That said, this budget range depends on several other factors, such as your credit score, down payment, existing debt, and current market conditions.

I Make $80K A Year – How Much House Can I Afford?

Lenders evaluate your $80,000 salary together with other factors, so the first thing you should do when figuring out how much house you can afford is calculate your monthly income and expenses.

With an $80,000 annual salary, your gross monthly income is approximately $6,667 (before taxes). For expenses, list out your monthly debt payments, such as credit cards and student loans. You should also take a close look at your accounts to see how much you can realistically save for a down payment.

The Rocket Mortgage® Home Affordability Calculator allows you to get a personalized estimate based on your income, where you're looking to buy, your debt picture and other important factors.

The 28% Rule

It's important to figure out how much of your income should go to your mortgage.

Mortgage lenders typically want to see you spending no more than 28% of your gross monthly income on housing expenses. If you're earning $80,000, this means your monthly mortgage payment, property taxes, and insurance should stay under $1,867.

Mortgage Breakdown On An $80K Salary

Here's what your monthly payments on a $300,000 home could look like in different scenarios if you're earning $80,000 (assuming a 30-year fixed mortgage). We picked this number because it’s in the midrange of affordability at an $80K salary.

Besides the monthly payments, you should also budget for additional costs like property taxes and homeowners insurance.

Factors That Impact How Much House Can I Afford

There are a few important factors that impact how much house you can afford on an $80K salary. 

• Credit score: Your credit score is one of the most important factors that influences your mortgage rate because it shows lenders how financially responsible you are. A higher score (700+) helps you get better interest rates and save. To improve your credit score, make all payments on time and keep your credit balances low.
• Down payment: Consider making a larger down payment to reduce your loan amount (and, as a result, your monthly payments). Putting 20% down gets rid of PMI (private mortgage insurance), too, so try automatically depositing a portion of each paycheck into a dedicated savings account for your house.
• Closing costs: Closing costs are typically 3% – 6% of your loan amount, and they can impact how much cash you have available for a down payment. For example, if you've saved $40,000 for a down payment and closing costs are $10,000, you only actually have $30,000 to put down on your house.
• Debit-to-income ratio: Lenders prefer a total debt-to-income ratio (DTI) below 36%. This means your monthly debts, including your mortgage, shouldn't go over $2,400 on an $80,000 salary. That said, some lenders will also accept a DTI ratio as high as 43% (but it'll usually give you higher interest rates on your mortgage loan).
• Current interest rates: Interest rates determine how much you'll have to pay for your mortgage each month, so they can significantly impact how much house you can afford. Being financially healthy allows you to lower your mortgage payment.
• Mortgage terms: A 30-year fixed mortgage gives you lower monthly payments, but a 15-year mortgage builds equity faster. Ultimately, it's your choice which mortgage term is better for you.
• Location and amenities: The house's location and amenities influence how much you pay in property taxes, which affects your monthly payments and overall affordability, as well as the price of the house as a whole.
• Maintenance and repairs: You'll need to maintain your house, and it's natural for things to break down and need repairs over time. Make sure to include these costs in your monthly budget.
• Taxes and insurance: Property taxes and homeowners insurance will add a couple of hundred dollars to your monthly payment, depending on location.

Mortgage Options For Your $80K Salary

Loan Types

Different financing options are available to you when you're making $80,000 a year. Here are the main types of mortgages you can qualify for:

• Conventional loans: These are standard mortgages not backed by a government agency. They allow you to buy a home with as little as 3% down. But if you put down 20% or more, you won't have to pay PMI.
• FHA: Loans backed by the Federal Housing Administration can be a good option if you have a lower credit score and less saved for a down payment (but there's an upfront mortgage insurance fee if you put less than 10% down).
• USDA: The Department of Agriculture offers these loans in qualifying rural areas without requiring a down payment. Please note that Rocket Mortgage® doesn’t offer USDA loans at this time, but we are here to help you understand your options.
• VA: This mortgage loan backed by the U.S. Department of Veterans Affairs (VA) is for veterans, active-duty service members, and eligible spouses. It offers 100% financing with no down payment or mortgage insurance required (but there’s a 1.4% – 3.3% funding fee).

First-Time Home Buyer Programs

First-time home buyer programs can make it easier for you to buy a home when earning $80,000. For example, the ONE+ program allows qualified buyers to put just 1% down and get a 2% grant from Rocket Mortgage. Some state housing authorities also offer down payment assistance and favorable interest rates.

The Bottom Line

Buying a home on an $80,000 salary is certainly achievable as long as you plan ahead. Since your annual income isn't the only thing that lenders will consider, focus on improving your credit score, saving for a down payment, and managing your debt. You have options when it comes to financing your home. We’re here to help you determine which option is best for your unique situation.

If you're ready to become a homeowner, start your mortgage application today.