When living in a larger metro like Seattle, WA, a $50k salary won’t help you get very far when it comes to owning property, but that doesn’t mean you can’t own property in more affordable areas of the country. It’s understandable to want to get away from the fear of rent increases in your apartment in San Francisco, CA and start to build equity in your home. The first step on this journey is to figure out how much house you can afford with a $50k salary.
Using Redfin’s mortgage calculator, on a $50k salary with zero current debts, 20% down payment, and a 36% debt-to-income ratio, you’ll be looking at homes valued at $205,000 and below. This might not seem like a lot, but there are many ways to help increase what you can afford or decrease the monthly mortgage payment. Read on to explore more in this Redfin article.
Factors that affect what you can afford:
What’s your credit score?
How large of 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 home, you can skip this section — sellers only care that you can cover the full amount. But if you’re financing the purchase, like most Americans, your credit score will significantly impact 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.
Don’t worry if your credit score…