How Much House Can I Afford With My Salary

How Much Can You Spend on a House Based on Salary?

That we all need housing is not in contention. A house is surely a basic human need.

Apart from needing a house, something else is also as important. That is affordability. Which is to say, yes we – you and I need a house, but can we afford it.

The cost or price of getting a house comes in ranges, that is, it is possible to afford a house no matter who you are.

A lot of the affordability would also depend on some factors chief of which is your salary.

How much do you earn, how much is your salary?

The type of house which you can afford would depend largely on your salary as a salary earner. Since there are houses at different prices and costs, what it means is that there are houses for every income level there is.


The question now becomes, how much house can I afford with my salary?

To be able to provide an answer to this question, there are certain things to be put into proper consideration. They include;

How Much Do I Earn

The first consideration in determining how much house you can afford with your salary is how much exactly your salary is. The amount of your salary is a major factor in determining how much house you can afford.

The amount of your salary is so important in determining how much house you can afford because if you earn $20,000 (U.S. dollar), you should not honestly expect to be able to afford the same house which your childhood friend Jack, whose salary is $55,000 can afford.

Consider your Expenses

Another important consideration is your expenses. How much you spend from your salary will go a long way in determining how much house you can afford with your salary.

These expenses are usually your monthly obligations. They include such expenses as utility bills, transportation, and budget for feeding.

These expenses come from your salary, so due consideration should be made to them in order to determine how much house you can afford with your salary. The necessary deductions have to be made from your salary.

Your Debt Obligations

You also need to consider your debt obligations and interest payments which you have to make. These could include interest payments on auto loans and salary advances. And these debts have to be considered in monthly terms.

For the purpose of your salary and how much house it can afford, the debt obligations which the banks consider are;

  • Credit Cards

The monthly credit cards are considered with the minimum monthly payments.

  • Other Loan Sources

Also considered are other sources of your loan and the monthly payments.

  • Auto Loans

Your monthly payments on your car are also considered by the banks.

  • Student Loans

Your student loan interest payments are also considered by the banks. The consideration is mainly for your salary based repayment plans. In this case, the lender would consider the minimum monthly payments which you are making.

Other Income Sources

While determining how much house you can afford with your salary, you should also make considerations for your other sources of income.

The other sources of income to consider include income from side gigs, if you have any, affiliate earnings if you are part of an affiliate program, dividends from equity investments, and income from debt instruments which you own.

These alternative income sources should be considered because they also go to taking care of your expenses and how much money you save.

Use a Basic Approach

In other to arrive at how much house you can afford with your salary, we are going to adopt a basic approach that would give us a better picture.

As a starting point to this approach, we are going to follow a hypothetical example. We are going to assume you earn an annual income of $50,000 (US. dollar). Note that this sum is assumed as a gross salary because that is what the banks would work with.

To determine your monthly salary, we would divide your annual salary by 12, which would give us a monthly salary of $4,166.67 (U.S. dollar). A good place to start would be a house that costs around two and a half times your annual salary.

Using our $50,000 (U.S. dollar) annual salary above, two and a half of that sum would be $50,000 x 2.5 which would give us a sum of $125,000 (U.S. dollar).

A house that costs $125,000 (U.S. dollar) would be a realistic sum which our hypothetical salary of $50,000 can afford.


While it is not in doubt that we all need to have a house, affordability is also important. Ensure that the house which you are going for is one which you can comfortably and conveniently afford based on your salary and income.

While paying for your house, ensure to stay the course on your budget. You must also understand that apart from how much house your salary can afford, the guiding goal should also be about your future and financial security.

Also, realize the difference between how much house your salary can afford and how much house you can comfortably afford.

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