i make $85000 a year how much house can i afford

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Welcome to our blog post where we explore the exciting world of homeownership! If you find yourself wondering, “i make $85000 a year how much house can I afford?” then you’ve come to the right place.

If you make $85,000 a year, you can probably buy a house that costs between $255,000 and $340,000. That’s how much you can afford.

Let’s find out what you need to know to buy your dream home. We’ll give you some helpful advice to make it easy. Ready? Let’s go!

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Want to buy a house but not sure how much you can pay for it? Try the Mortgage Affordability Calculator! It looks at your money, like how much you make and owe, to tell you the right house price for you.

How Much House Can I Afford on My Salary?

The 28/36 Rule

When determining how much house you can afford on your salary, one popular guideline is the 28/36 rule. This rule suggests that your monthly mortgage payment should not exceed 28% of your gross monthly income. Additionally, your total debt payments, including the mortgage, should not exceed 36% of your gross monthly income.

By adhering to this rule, you ensure that a significant portion of your income is not consumed by housing expenses alone. It allows for financial flexibility and ensures that you have enough room in your budget for other essential expenses like utilities, groceries, and savings.

The 50% Rule

Another approach to estimating how much house you can afford is the 50% rule. According to this guideline, no more than half of your after-tax income should be allocated toward all housing-related expenses. This includes not just the mortgage payment but also property taxes, insurance premiums, and maintenance costs.

Following this rule helps prevent becoming “house poor” – where a large chunk of your earnings goes toward homeownership with little left over for other important aspects of life. By limiting housing costs to half of your income or less, you maintain financial stability and have breathing room in case unexpected expenses arise.

The Debt-to-Income Ratio

In addition to these rules of thumb, lenders often consider another crucial factor: the debt-to-income ratio (DTI). Your DTI compares how much debt you owe each month compared to how much money you bring in before taxes are deducted.

Lenders typically prefer borrowers with a lower DTI as it indicates they have sufficient disposable income to cover their debts comfortably. To calculate yours accurately:

1) Add up all recurring monthly debts such as credit card payments and loan installments.
2) Divide this sum by your gross monthly income.
3) Multiply the result by 100 to get a percentage value representing the DTI ratio.

Ideally speaking; a lower DTI ratio is more favorable, as it indicates better financial health.

How to calculate your monthly mortgage payment

i-make-85000-a-year-how-much-house-can-i-affordCalculating your monthly mortgage payment helps you know how much house you can afford. Here’s how:

Get info: Find out your loan amount, interest rate, and loan term.

Use a tool or expert: Use an online calculator or talk to a money expert for accurate results.

Break it down: Your payment has four parts – money you borrowed (principal), cost to borrow (interest), property taxes, and home insurance.

Tax estimate: Check local tax rates for homes like yours, multiply by your home’s price, then divide by 12 for monthly tax cost.

Insurance cost: Get insurance quotes to find an average cost.

Put it together: Use a calculator or expert to see how each part adds up to your monthly payment.

Remember PMI: If you put less than 20% down, you might need private mortgage insurance (PMI). Include it in your final payment.

By doing this, you’ll know how much house you can comfortably afford.

What is the 28/36 rule

The 28/36 rule is a guideline used by lenders to assess your financial fitness for a mortgage.

It suggests that your total monthly housing costs, like mortgage, taxes, and insurance, should be no more than 28% of your monthly income, and your total debt payments, including credit cards and loans, should be no more than 36% of your monthly income. This helps ensure you can afford your housing and debt without straining your finances.

How to Save for a House (i make $85000 a year how much house can i afford)

Set Clear Goals: Decide how much money you need to buy your dream home. Break it into smaller parts to make it easier.

Create a Budget: Keep track of the money you get and spend. Find places where you can save, like not eating out or going to the movies.

Save Automatically: Make a plan to move some money from your paycheck or bank account into a special savings account for your dream home. This way, you won’t spend it on other things.

Make Extra Money: Think about doing extra jobs or tasks to get more money. All the extra money can go into your dream home fund.

Pay Off Debts: If you owe money on credit cards or loans, try to pay those off first. It will help you save more money later.

Invest Smartly: Learn about ways to make your money grow, like buying stocks or mutual funds. They can make more money over time.

Stay Focused: Saving for a house takes time and effort. Don’t give up, even if you want to spend your money on fun things. Keep your goal in mind.

By doing these things, you’ll be better prepared to buy your dream home when the time comes. Remember, even small savings add up, so start saving now!

Steps to Find Your Dream Home


Make a Must-Have List: Before you look for a house, write down what you really need. How many bedrooms? A yard? Close to school or stores? This helps you pick the right houses.

Set Your Money Limit: Know how much you can spend. Think about taxes and other costs. Use online tools to see how much you can pay every month.

Check Out Areas: Look at different places to live. Think about safety, how you’ll get around, and what’s nearby.

Get Help from a Realtor: Realtors are pros who can help you find the perfect home. They know about houses before they’re for sale and can guide you.

Visit Open Houses: Go to open houses in areas you like. It helps you see how houses look and feel. You can imagine living there.

Think About Selling Later: Even if it’s not forever, think about how easy it is to sell the house later. Location, schools, and nearby stuff matter.

Don’t Hurry: Buying a house is a big deal. Take your time. The right one will come when it’s time.

Remember, finding the perfect home might take time, but if you focus on what’s important to you, you’ll make a smart choice based on your money and what you like.

How to get pre-approved for a mortgage

To get pre-approved for a mortgage:

1. Collect your money papers like tax papers, paycheck slips, and bank statements to show how much money you have.

2. Look at different money lenders and see who offers the best deal.

3. Choose a lender and fill out their paper or online form.

4. The lender will check your money papers and see if you can get a loan.

5. They’ll give you a paper that says how much money they can lend you.

Being pre-approved doesn’t mean you can buy a house for sure, but it shows sellers you’re serious about buying. It’s an important step when buying a house.

And when picking a house, don’t hurry. Take your time and choose the one that’s best for you and your money. It might take time, but it’s worth it to make a smart choice.

Summery on i make $85000 a year how much house can i afford

In the exciting world of homeownership, with an $85,000 annual income, financial wisdom is your guiding star. The 28/36 rule ensures your housing costs don’t overwhelm, while saving means setting clear goals and budgeting smartly. Finding your dream home is a journey of patience, guided by your must-haves and a budget. Getting pre-approved for a mortgage marks your commitment. So, remember, in this homeownership hymn, careful planning and patience harmonize to help you claim your piece of the dream.

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