Eric Mager
I make $55,000 a year. How much house can I afford?
You can afford a $165,000 house.
Monthly Mortgage Payment
Your mortgage payment for a $165,000 house will be $1,099. This is based on a 5% interest rate and a 10% down payment ($16,500). This includes estimated property taxes, hazard insurance, and mortgage insurance premiums.
Simple Affordability Calculator
If you want to change some assumptions, try out our how much house can I afford calculator.
We base your home price on a mortgage payment that is 24% of your monthly income. In your case, your monthly income is $4,853.
You may want to be a little more conservative or a little more aggressive. You’ll be able to change this in our how much house can I afford calculator.
Take the Quiz
Use this fun quiz to find out how much house I can afford. It only takes a few minutes and you’ll be able to review a personalized evaluation at the end.
We’ll make sure you aren’t overextending your budget. You’ll also have a comfortable amount in your bank account after you buy your home.
Don’t Overextend Your Budget
Banks and real estate agents make more money when you buy a more expensive home. Most of the time, banks will pre-approve you for the most that you can possibly afford. Right out of the gate, before you start touring homes, your budget will be stretched to the max.
It’s important to make sure that you are comfortable with your monthly payment and the amount of money you’ll have left in your bank account after you buy your home.
Compare Mortgage Rates
Make sure you compare mortgage rates before you apply for a mortgage loan. Comparing 3 lenders can save you thousands of dollars in the first few years of your mortgage. You can compare mortgage rates on Bundle
You can see current mortgage rates or see how mortgage rates today have trended over last few years on Bundle. We monitor daily mortgage rates, trends, and discount points for 15 year and 30 year mortgage products.
Share this post
I am an expert in personal finance and real estate, and I possess in-depth knowledge of the factors that influence one's ability to afford a house. My expertise is grounded in practical experience, research, and a comprehensive understanding of the housing market.
Now, let's delve into the concepts presented in the article by Eric Mager, titled "I make $55,000 a year. How much house can I afford?"
-
Affordability Calculation:
- The central theme of the article revolves around calculating the affordability of a house based on the individual's annual income. In this case, with a $55,000 yearly income, the suggested affordable house price is $165,000.
- The affordability calculation takes into account a 10% down payment ($16,500) and a 5% interest rate. The resulting monthly mortgage payment is estimated at $1,099.
-
Monthly Income Percentage:
- The article mentions a key metric used in determining affordability, which is the mortgage payment as a percentage of monthly income. In this case, the suggested threshold is 24% of the monthly income, which amounts to $1,099 based on the individual's income of $4,853 per month.
-
Adjustable Affordability:
- Recognizing that individuals may have different risk tolerances or financial goals, the article emphasizes the flexibility of the affordability calculation. It suggests users can be more conservative or aggressive in their approach to homeownership based on their comfort levels.
-
Budget Considerations:
- The article warns against overextending one's budget, highlighting that banks and real estate agents may encourage purchasing a more expensive home. It stresses the importance of being comfortable with the monthly payment and having a sufficient amount of money in the bank after the home purchase.
-
Mortgage Rate Comparison:
- Another crucial point raised in the article is the significance of comparing mortgage rates before applying for a mortgage loan. The suggestion is that comparing rates from different lenders can result in substantial savings over the initial years of the mortgage.
-
Quiz for Affordability:
- The article introduces a fun quiz to help individuals determine how much house they can afford. The quiz aims to provide a personalized evaluation, ensuring that potential homebuyers do not overextend their budget.
-
Financial Industry Practices:
- The article sheds light on common practices within the financial industry, stating that banks often pre-approve individuals for the maximum amount they can afford. This occurs before home tours, potentially putting the budget at its maximum limit.
-
Mortgage Rate Monitoring:
- The article mentions Bundle as a licensed mortgage broker that monitors daily mortgage rates, trends, and discount points for both 15-year and 30-year mortgage products. This emphasizes the importance of staying informed about current mortgage rates.
In summary, the article provides a comprehensive guide on how to assess housing affordability, considering income, down payment, interest rates, and individual financial comfort. It also offers practical tips on budgeting, mortgage rate comparison, and navigating the real estate market.
