How Much House Can I Afford With A $90K Salary?

A $90,000 per year salary means you’re earning more than the national median household income, which was $80,610 in 2023, according to the U.S. Census Bureau. This should put you in a good position to purchase a home, but your income isn’t the only factor that determines what you can afford. 

If you’re wondering “How much house can I afford with a $90K salary?” here’s what you need to know.

The Answer: $300,000 – $350,000

If you have a $90,000 annual salary, you can generally afford a house price between $300,000 and $350,000. However, this budget also depends on other factors, including your credit score, financial situation and market conditions.

I Make $90K A Year: How Much House Can I Afford?

Although annual income is a key factor in deciding your home-buying budget, it’s not the only one when determining how much house you can afford.

The Rocket Mortgage^® Home Affordability Calculator can help you identify your budget and determine your price range based on your annual gross income, where you want to buy, the amount of cash set aside for a down payment and closing costs, your monthly debt payments and your credit score estimate. The calculator will give you a range that’s affordable, one that may be stretching your budget and one that’s at the upper limit of what you can afford.

The 28% Rule

When determining home affordability, many lenders use the 28/36 rule, or the 28% rule, as a general guide to determine what percentage of income should go to your mortgage.

This rule says that you should spend no more than 28% of your gross income on housing — principal, interest, taxes and insurance — and no more than 36% on all debt, such as housing debts, student loans, car loans, credit cards, etc.

Mortgage Breakdown On A $90K Salary

If you earn $90,000 per year, your monthly income breaks down to $7,500 before taxes. Following the 28% rule, your monthly housing payments shouldn’t be more than 28% of $7,500, or $2,100.

Let’s look at some examples of what you can afford with a $90,000 salary on a 30-year fixed mortgage by following the 28% rule.

If you qualify for a 7% interest rate and make a 20% down payment on a $350,000 home, or $70,000, the mortgage principal and interest come to $1,863 per month. This gives you an additional $237 per month to put toward taxes and homeowners insurance.

Changes to the interest rate and down payment amount can affect what you can afford.

If you qualify for a 6.5% interest rate and make a 10% down payment on a $350,000 home, the mortgage principal and interest will total $1,991 each month. In this scenario, you’ll only have $109 left over to go toward taxes and insurance. If you live in an area with high property taxes and expensive insurance premiums, you will either have to save more money for a bigger down payment or look at less expensive homes in order to stay with the 28% rule.

Using the same example, increasing your down payment amount to 15% will reduce your monthly payment to $1,880. Alternatively, putting 10% down and opting for a $300,000 home instead means you’ll pay $1,707 each month toward your principal and interest.

Determining How Much House Can I Afford

Every situation is different. Each of these factors also contributes to home affordability.

Credit Score

Mortgage lenders will look at your credit history and score to assess your financial reliability. For a conventional mortgage, the higher your credit score, the lower your interest rate and monthly mortgage payment will be.

Most lenders look for a credit score of at least 620 for conventional loans, but it’s possible to qualify for other types of home loans with a lower score. You can also use this opportunity to raise your credit score by paying off debt or making timely payments to secure a lower interest rate and lower your mortgage payment.

Down Payment

A down payment is a percentage of a home’s purchase price and can range from 3% – 20%. Putting down more money on a house can reduce your monthly payment, and putting 20% down means you can avoid paying private mortgage insurance (PMI) on a conventional loan.

Closing Costs

Closing costs are fees and expenses associated with buying a home, ranging from 3% – 6% of the loan amount. For a $350,000 home and a 20% down payment, closing costs could be as much as $16,800 for a $280,000 mortgage.

Debt-To-Income Ratio

Your debt-to-income ratio (DTI) is your monthly debt payments divided by your gross monthly income. Most lenders will accept a DTI ratio of 43% or less, but it’s better to aim for 36% or less. With a low DTI, you may be able to qualify for better interest rates and a larger loan.

Current Interest Rates

A mortgage interest rate is the percentage of money paid to borrow money for a home loan. When interest rates are higher, you’ll spend more money on interest over the loan term. When rates are lower, you can afford more home than you could with higher ones. You’ll typically receive a more favorable interest rate if you have a higher credit score and down payment.

Mortgage Terms

A mortgage term is the length of time you have to repay the mortgage. Most are either 15 or 30 years. A longer mortgage term results in a lower monthly payment, but you’ll pay more money in interest. A shorter term comes with a higher monthly payment, but you’ll also save on interest.

Location And Amenities

There’s a reason “location, location, location” is a common saying in real estate. If look at two comparable homes within the same city, the one located in sought-after communities with nearby amenities will likely sell for more. The more desirable a location, the lower a home’s affordability could be.

Maintenance And Repairs

Maintenance and repairs are ongoing costs that homeowners need to fit into their monthly budget. If a home is in an affordable price range but requires a substantial amount of work, it could reduce the amount you can allocate to your mortgage. Even for a house in good shape, it’s suggested you put aside at least 1% of the house’s value annually for maintenance.

Taxes And Insurance

Mortgage Options For Your $90K Salary

There are different types of mortgages available with a $90K-a-year salary. Here are the most common:

• Conventional: Conventional mortgages are the most common, and you’ll generally qualify with a minimum credit score of 620, a DTI of up to 50% and as little as 3% down.
• FHA: Insured by the Federal Housing Authority, FHA loans allow you to purchase a home with or a credit score of 500 with a 10% down payment or a credit score of 580 and a down payment of 3.5%
• USDA: USDA loans are backed by the U.S. Department of Agriculture, and allow you to buy a home with no money down. There’s no minimum credit score requirement but most lenders look for a score of at least 580 to 620. You must also meet income requirements and buy a home in an eligible suburban or rural area. Rocket Mortgage^®  does not offer USDA loans at this time.
• VA: VA loans are insured through the Department of Veterans Affairs and allow you to buy a home with $0 down. However, you must meet military service requirements to qualify. There’s no minimum credit score but most lenders require a score of at least 620.

First-Time Home Buyer Programs

First-time home buyer programs at the federal and state levels can help make homeownership more affordable by offering down payment and closing cost assistance to moderate- to low-income borrowers. There are also special loans that come with reduced interest rates and more favorable terms. Whether you qualify depends on the program’s eligibility requirements. In many cases, you will need to fall within certain income limits.

Additionally, you don’t necessarily have to be a first-time home buyer. According to the U.S. Department of Housing and Urban Development (HUD), a first-time buyer is someone who has not owned a principal residence in the previous 3 years.

The Bottom Line

Buying a home on a $90K salary is possible; however, income isn’t the only thing to consider when starting the home buying process. Buyers should also consider their credit score, interest rate, DTI ratio, down payment and closing costs, taxes and insurance and more. Evaluating your finances and taking action to improve your creditworthiness and financial standing can help make homeownership more affordable.

Ready to start the home buying process? Start a mortgage application today and see what you qualify for.