How Much House Can I Afford on $75K Income?
A comprehensive guide to understanding home affordability on a $75,000 salary with practical examples and calculator.
How Much House Can I Afford on $75K Income?
When you're earning $75,000 a year, understanding how much house you can afford is crucial to making a sound financial decision. This guide breaks down the calculations, considerations, and practical examples to help you determine your ideal price range.
The 28/36 Rule
Most financial experts recommend following the 28/36 rule:
- No more than 28% of your gross monthly income should go toward housing expenses
For a $75,000 annual income:
- Gross monthly income: $6,250
Example Calculation
Let's break down what a $1,750 monthly payment might get you:
- Principal and interest: $1,200
With current interest rates around 6.5% on a 30-year fixed mortgage and a 20% down payment, you could afford approximately a $225,000 home.
Other Factors to Consider
- Down payment: A larger down payment increases your buying power
Meet Alex: A Real Example
Alex earns $75,000 annually as a marketing manager. After accounting for:
Alex's remaining debt capacity is $1,550/month for housing, qualifying for approximately a $200,000 home with 20% down.
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