Whether you are looking at moving into another home or purchasing your first home, a $200k salary opens up your options for what you could afford. Before signing touring homes or signing any papers, it’s important to know what to expect whether you’re looking for homes to purchase in Portland, OR or in Charleston, SC.
Using Redfin’s mortgage calculator, on a $200k salary with zero current debts, 20% down payment, and a 36% debt-to-income ratio, you’ll be looking at homes valued at $820,000 and below. Of course, this is a quick answer to a more complex question. How much house you can afford on a $200k salary depends on a variety of factors that will be explored in this Redfin Real Estate article.
Factors that affect what you can afford:
What’s your credit score?
How large of a down payment can you afford?
What’s your debt-to-income ratio?
What are the current interest rates?
Where are you trying to live?
How much work does the house need?
The bottom line: know what you can afford
What’s your credit score?
If you’re paying cash for your house, skip this section. Sellers don’t really care about your credit score as long as you can pay for the house in full. However, if you’ll need financing to move into your new home – like most Americans – your credit score can play a large role in what you can afford.
- Exceptional (800+): You qualify for the best rates available and can have your pick of lenders.
- Very good (740-799): These borrowers also tend to qualify for high-quality interest rates
- Good (670-739): This is where you’ll start to see a slight increase in interest rates, but this range is considered favorable.
- Fair (580-669): Interest rates in this range can start to increase more.
- Poor (579 or lower): If you’re in this range, you’ll pay significantly more in interest, and securing a mortgage can become much harder.
It’s okay if your credit score is toward the lower end of this range,…