New York (Washington Insider Magazine) – A $100K salary will put you in a good position and will provide you with an easy opportunity to buy a home. One of the first things that most home buyers think of is How much house can I afford?
With a $100,000 salary, you can sort out a great home-buying budget. The buyer can go in the high-$300,000 to $400,000 range and can even consider going above. It is important to have a good income to buy a house and you also need a strong credit score.
It is best if you have low debts, and a decent down payment to purchase your dream home. With all these factors and $100K of income, there are a lot of doors open for you in the mortgage world
Is the 30% Rule For Home Buyers Suitable For A Person With A 100K Salary?
Many personal finance experts recommend that you should spend 30% of your monthly income on housing costs. If your annual salary is $100,000, then based on the 30% rule you could spend around $2,500 per month for paying your house payment. If you buy a home with a 10% down payment and a 6% fixed interest rate, then you can afford a home that is around $350,000 to $400,000.
Experts claim this to be the 30% “rule,” but home buyers can consider it as a general guideline. A $100,000 earner who has no existing debt and no children can spend 40% or more on housing expenses.
Another $100,000 earner who has to pay for two car payments, and a big student loan balance, must spend only 25% on housing. A homeowner’s insurance and private mortgage insurance can also impact your home-buying budget. The less you spend on the” monthly fees, the more you can afford to buy your dream home.
How Much House Can You Afford With A 100K Salary?
How much money can you afford to pay each month if you earn a salary of 100K depends on a lot of factors. Your monthly budget sets the size of your house payment. Having a $100K income is good to start with.
The price of the home depends on the monthly payment of the house and the credit score. It also depends on the down payment size and the cash reserves. The debt-to-income ratio also matters when it comes to buying your home.
Two different home buyers with $100,000 annual incomes, can afford different types of houses. When it comes to buying your home borrowing credentials matters a lot.
Tips For Buying A House On A $100K salary
Your salary gets affected by the amount of money you borrow in a mortgage. It will also impact the type of loans you can take out. Here are some tips on buying a home with a 100K Salary.
1.Consider Income Limits On Mortgage Programs
There are some programs, like the zero-down USDA mortgage, that come with income limits. Not everyone can qualify to sign up for such programs either. The USDA program will cap the users’ income by 115%. This is the area median income (AMI) and these limits apply to total household income, and not just to the borrower.
2. Income Limits For Down Payment
Earning $100K a year can allow you to avail yourself of the down payment assistance (DPA) programs. Many DPA programs are active at the state and local levels. The eligibility criteria vary and most of these programs cap assistance at a certain amount of income.
So if are counting on a DPA to help you buy a home, then it is important to know the requirements before setting out your plan.
The loan limits are set annually by the federal government. Mortgages that are exceeding the limits are considered “jumbo mortgages” and they are not government-guaranteed. The conforming loan limit in 2023 is $726,200, but there are chances for it to increase up to $1,089,300 in high-cost areas.
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3. Make Sure To Check Your Home Buying Budget
It’s a good idea to figure out how much money can you afford before home shopping. In this way, you will avoid falling in love with a property that you cannot have an access to. It is important to consider your expenses and credit history along with your annual income.
This will determine your price range. You can also use a home affordability calculator or take assistance from a professional. The lender will give you a quick assessment and will enhance your buying power.