How much house can I afford?

General
1

I might have between $100k and $110k for a down payment from selling my current home. Our household income is $146,000 per year. We have $18k in student loans and $14k on a car loan, and $40k in an emergency fund in a high-yield savings account. Based on this, how much house can we afford?

2

Here’s a helpful link to a house affordability calculator: How Much House Can I Afford? - House Affordability Calculator. You can enter all your details to get a precise figure.

3

Pippin said:
Here’s a helpful link to a house affordability calculator: How Much House Can I Afford? - House Affordability Calculator. You can enter all your details to get a precise figure.

I tried this calculator with a $420k/year income, and it suggested I could afford a $1.5M house. However, my net is about 51% of my gross due to taxes, so this seems unrealistic.

4

@Rylan
Calculators generally base their estimates on gross income, not net, so they don’t account for personal expenditures or tax deductions.

5

@Rylan
Mortgage affordability is often calculated using 28% of your gross monthly income as a baseline for what you can pay monthly.

6

@Rylan
It’s up to you to decide what you’re comfortable spending based on your entire financial picture, not just the gross income.

7

Considering your income and savings, I’d recommend looking at homes priced around $400,000. This keeps your mortgage manageable relative to your income and allows flexibility for other expenses.

8

Kim said:
Considering your income and savings, I’d recommend looking at homes priced around $400,000. This keeps your mortgage manageable relative to your income and allows flexibility for other expenses.

Thank you for the guidance!

9

Kim said:
Considering your income and savings, I’d recommend looking at homes priced around $400,000. This keeps your mortgage manageable relative to your income and allows flexibility for other expenses.

The multiplier of income to home price is a rough guideline. More important is your debt-to-income ratio (DTI).

10

A good rule of thumb is to not exceed three times your annual income on the home purchase, ensuring you also maintain a six-month reserve for emergencies.

11

We have a similar income and bought a home for $350k with a 20% down payment. It’s been very manageable for us without stretching our finances too thin.

12

Iman said:
We have a similar income and bought a home for $350k with a 20% down payment. It’s been very manageable for us without stretching our finances too thin.

Appreciate your insight! It’s great to hear from someone in a similar situation.

13

@Thorn
I just purchased a home for $340k on a $150k/year income with no other significant debts, and it feels right for us.

14

Based on your financial situation, you might be able to afford a home up to $425k if you’re comfortable with a slightly higher monthly payment.