How Much House Can I Afford with 60k Salary? Tips and Insights

With home prices rising, many wonder what they can afford on a $60,000 salary. If you bring home $60,000 each year, you’re right in line with recent U.S. Bureau of Labor and Statistics (BLS) data, which marks $60,580 as the median annual income. Housing prices and mortgage rates are creeping higher, so determining how much house you can buy requires calculating whether your salary can cover all the costs of homeownership.

The median home sales price as of Q3 2024 is $420,400. With an income of $60,000, you can afford monthly housing expenses of around $1,400, which translates to a home valued between $160,000 and $240,000. To land on an exact number, consider other costs, such as your down payment amount, interest rates, location, and more. 

Below, we’ll provide sample calculations to show you how we arrived at this range. This article also offers tips and insights on how much house you can afford with a $60,000 salary. 

What Affects Home Affordability 

Several factors come into play when figuring out how much house you can afford with a $60,000 salary. Let’s break them down. (Note: This section assumes that you want to allocate $1,400 each month to your mortgage, which is less than 30% of your income.)

Interest Rates

The interest rate you get on your mortgage will directly impact your monthly mortgage payment. The lower the rate, the less you’ll pay each month and over the life of the loan. 

You qualify for a 30-year loan with a 7% interest rate. If you put $0 down, you could get a loan of $210,000 without exceeding the $1,400 monthly limit (excluding property tax, private mortgage insurance (PMI), and homeowners insurance). If you find the same loan with a lower rate of 6.5%, the monthly payment will drop $70 per month to about $1,327. 

While the difference may seem minor, cutting $70 off your monthly payments saves you about $25,000 over the life of the loan. You can use a mortgage calculator to compare housing costs and various mortgage rates in your area.

Location

Where you choose to buy has a significant impact on the price of the home. Houses in urban areas or high-demand neighborhoods near popular amenities tend to cost more. That nationwide median home price is more than $400,000, after all.

Being flexible about where you settle can be helpful, especially if you’re trying to save money for a house in a short period, such as six months. A $210,000 budget may get you a small apartment in a major city and a single-family home in a more rural area. If you can’t afford a single-family home, consider a townhouse or condo, which can be more affordable.

Down Payment Amount

The more you can save for a down payment, the less you need to borrow, which often translates to a lower monthly payment. Most people put down between 10% and 20%, but this may be a challenge with a $60,000 salary. Some lenders require less than 5% of the purchase price, and FHA loans require just 3.5% down if you have a credit score of 580 and above. (More on financing options later.)

Twenty percent down on a $210,000 home is $42,000, which means you’d need to finance $158,000. Not only will putting 20% down lower your monthly payments, but it also eliminates the PMI requirement, reducing the overall cost even further. 

Credit Score

A good credit score can be your key to lower interest rates and better terms. Lenders typically reserve the best rates for homebuyers with good credit histories, meaning you’d pay less interest and have a lower monthly payment. 

Getting a mortgage rate even just 0.3% lower can warrant big savings, so work to improve your credit score as much as possible before applying for a mortgage loan. 

Debt-to-Income Ratio (DTI)

In addition to your income and credit score, lenders look at your DTI to decide how much mortgage you can handle. A high DTI can get your loan denied. Lenders like to see a mortgage DTI of less than 35% to ensure you’re not overextended financially. Following these guidelines, with a monthly income of $5,000, your ideal mortgage payment should be below $1,750.

If your current DTI is more than 35%, work on paying off existing debt or finding ways to make more money, if possible, to keep it within lender guidelines. 

Property Taxes and Insurance

Property taxes and insurance vary based on location and can significantly affect monthly costs. New Jersey has one of the highest property tax rates in the country, at around 2.23%. In contrast, states like Hawaii or Arizona have much lower rates, around 0.32% to 0.63%. Each municipality charges its rates based on the assessed value of your home, so it’s important to compare how property taxes can increase or decrease your monthly payments. 

Homeowners’ insurance costs differ based on location and home value. Premiums can be substantially higher in areas prone to natural disasters, like Florida or California. 

How to Calculate How Much House You Can Afford

Several factors determine how much house you can afford with a $60,000 salary. With this salary, you can afford a home priced between $160,000 and $250,000, depending on your down payment and mortgage terms. More importantly, the house you can afford on this salary will depend on your preferred debt-to-income ratio.

Calculate how much house you can afford with a 30-year mortgage and no additional debts. As you can see below, these numbers fluctuate based on your down payment and how much of your annual salary you want to put toward your mortgage.

Annual Salary	$60,000	$60,000	$60,000
Down Payment	$10,000	$25,000	$40,000
Mortgage Rate	7%	7%	7%
20% Income Allocation	$160,00	$175,100	$190,100
25% Income Allocation	$197,800	$213,000	$227,900
28% Income Allocation	$220,400	$235,600	$250,100

*For example purposes only. Does not account for property tax, principle and interest, or PMI.

However, most Americans have some type of debt. We’ll break it down below using a standard home affordability formula known as the 28/36 rule.

28/36 Rule

The 28/36 rule suggests that up to 28% of your gross income should go toward housing expenses, like mortgage and insurance, and no more than 36% of your income should cover all your debts combined. 

Here’s how this translates each month if you earn $60,000 per year:

The 28/36 Rule	For a $60,000 Salary
28% of monthly income	$1,400 for housing expenses
36% of monthly income	$1,800 for all debts

Using this rule, you would limit your search to homes you can afford for $1,400 per month or less. Your total debts, such as car payments, credit card payments, and child support payments, would be at most $1,800. 

Here’s an example of what your house price and debt ratio would need to be to keep your total debts under $1,800, including your mortgage payment:

Annual Salary	$60,000	$60,000	$60,000
Mortgage Rate	7%	7%	7%
House Price	$210,000	176,000	$142,000
Monthly Mortgage Payment	$1,400	$1,175	$950
Monthly Car Payment	$100	$200	$300
Credit Cards Payments	$50	$75	$100
Child Support Payments	$250	$350	$450
36% Income Allocation (All Debts)	$1,800	$1,800	$1,800

*For example purposes only. Does not account for property tax, principle and interest, or PMI.

When shopping for a home, be honest about your existing debts. For example, if you have larger car payments or other loans to repay, the above table proves that you’ll need to buy a more affordable home to keep your debts at 36% under this rule. 

Home Financing Options Available to $60K Households

Many loan financing options might help you afford a home on a $60,000 salary. Here are a few to consider:

FHA Loans

If you lack the funds for a down payment or have a lower credit score, an FHA loan could help you buy a home. The Federal Housing Administration backs this type of loan and has flexible requirements to make homeownership more accessible.

FHA loans allow you to buy a home with as little as a 3.5% down payment if you have a credit score of 580 or higher. If your score is between 500 and 579, a 10% downpayment is needed. They come in 15- or 30-year fixed terms. 

These loans require mortgage insurance to protect the lender. An upfront premium of 1.75% of the loan plus monthly mortgage insurance premiums. This monthly insurance stays for the life of the loan if your down payment is less than 10%. It can be removed after 11 years if you put down 10% or more. 

Conventional Loans

Conventional loans may be a good option if you have an excellent credit score and a bit more saved up. The government does not back these but offers many benefits if you meet the requirements. You’ll need a minimum credit score of 620 and a 3% down payment (20% to avoid PMI) to qualify.

Conventional loans are available in both 15- and 30-year fixed and adjustable-rate mortgage (ARM) options. Interest rates vary based on your creditworthiness; a mortgage calculator can help you compare current rates from various lenders.

USDA Loans

Low- and moderate-income buyers searching for homes in rural areas can get a USDA loan. The U.S. Department of Agriculture backs these loans and aims to make homeownership affordable in qualifying areas.

One of the most significant advantages of a USDA loan is 100% financing. This means you can buy a home with no down payment. They are typically offered in 30-year fixed terms with interest rates ranging around 6%. 

USDA loans don’t have traditional mortgage insurance, but they include an annual guarantee fee, similar to PMI, and an upfront fee of 1% of the loan amount. 

First-time Homebuyer Programs

First-time homebuyer programs can ease the financial burden if you’ve never bought a home. For instance, HUD’s Good Neighbor Next Door program provides eligible buyers, such as teachers and firefighters, a 50% discount on specific properties. 

After completing a required education course, Fannie Mae’s HomePath Ready Buyer Program offers up to 3% in closing cost assistance for first-time buyers of foreclosed properties.

Down Payment Assistance (DPA) options include grants, matched savings programs, or forgivable loans to cover upfront costs. Your real estate agent can help you find programs for which you are eligible.

Ways to Increase How Much House You Can Afford

If financial problems or sizable debt make home affordability an issue, here’s what you can do to boost your buying power.

• Increase your down payment: Putting down 20% or more can reduce your rate and eliminate the need for PMI. This lowers your monthly expenses by an average of 0.5% to 1% of the loan amount.
• Improve your credit score: Small changes make a significant impact. Raising your FICO score from 660 to 700 can reduce your 30-year mortgage rate by around 0.5%, saving you thousands over the loan term. 
• Lower your Debt-to-Income ratio by paying down high-interest debt: Reducing your DTI under 36% can make you more attractive to lenders, potentially increasing your loan amount. Buyers with DTIs are closer to 28% and have higher approval odds.
• Explore assistance programs: Many federal, state, and local programs offer down payment and closing cost assistance to help make homeownership affordable. 
• Opt for a longer loan term: While you’ll pay more in interest over the life of the loan, the monthly payments on a 30-year mortgage are smaller than the payments on a 15-year mortgage.
• Choose a less expensive market or home: Widen your home search to more affordable areas or consider downsizing to reduce costs.

Buying a home is one of the most significant decisions you’ll make. So, make sure you put in the time to understand what works best for your finances, lifestyle, and goals. Take advantage of every tool available; explore loan options, calculate affordability, and consider assistance programs. Each step can bring you closer to a well-informed buying decision.

How to Afford a House: FAQ

Have questions about determining how much house you can afford, what it takes to qualify, or anything else about the process? Let’s dive into the details below.

How Much House Can I Afford With a $10,000 Down Payment?

If you can put down $10,000, the amount of house you can afford will increase because your monthly mortgage payment will likely be lower than if you were to put no money down. Housing affordability will depend on your income, credit score, and debts. If you earn $60,000 per year, a $10,000 down payment can afford you a home in the $180,000 to $210,000 range.

How Much House Can I Afford With a $60,000 Salary?

With a $60,000 salary, you’ll probably qualify for a home valued between $180,000 and $210,000. The exact number depends on your financial situation, credit score, and market conditions.

What Credit Score Is Needed to Buy a $300,000 House?

A mortgage on a $300,000 home typically requires a credit score of 620 or higher for a conventional loan and a score of at least 580 for an FHA loan. Higher credit scores help you secure better interest rates, which can lower your monthly payments. 

Can I Afford a $300,000 House With a $60,000 Salary?

Affording a $300,000 home on a $60,000 salary may be challenging. However, qualifying with a strong credit score, low existing debt, and a substantial down payment may be possible. 

How Much Income Do I Need for a $400,000 House?

For a $400,000 home, lenders generally look for an annual income of around $100,000 to keep mortgage payments affordable under the 28/36 rule.