Mortgage

How a lot home can I afford if I make $ 100,000 a 12 months?

With a salary of $ 100,000, you are in a good position to buy a home

One of the first questions you ask when looking to buy a home is how much home can I afford?

With a salary of $ 100,000, you have a good budget to buy a home.

However, to qualify for the lowest mortgage rates – and therefore the largest loan amount – you also need high credit, low debt, and a decent down payment.

With all of these factors and an income of $ 100,000 per year, most of the doors in the mortgage world are open to you.

Find Out How Much House You Qualify For (Oct 5, 2020)

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Home Buying Examples: We're looking at a lot what you can afford for $ 100,000 a year

The amount you can borrow for a mortgage depends on many variables – and income is just one of them.

That means that two people who each make $ 100,000 a year but have different credit scores, debt levels, and savings can have very different home buying budgets.

Here are some examples of how much someone can afford for a salary of $ 100,000 when these other requirements are considered.

Buying a home with $ 100,000 salary and low credit

First, let's look at an example of a homebuyer who makes $ 100,000 a year but has lower creditworthiness and relatively high debt.

This could be someone who recently graduated with a student loan degree and hasn't had a chance to build their credit. Or someone who already has debt on various lines of credit – like credit cards and a car loan.

Either way, lower creditworthiness and higher debt means your home buying budget will be on the lower end of the spectrum.

$ 100,000 salary and low credit will buy a home under $ 300,000

Income: $ 100,000 / yearCredit score: 650Deposit: 5%Debt: $ 1,000 per monthInterest rate: 4.5% *Estimated house value: $ 288,500

* The interest rates shown are for example purposes only. Your own rate will be different

This borrower makes $ 100,000 and has a credit score of 650.

You are looking for an FHA mortgage with a low down payment. And they owe about $ 1,000 each month in non-mortgage debt.

Assuming the lender offers a 4.5% interest rate, which is above the current average due to their creditworthiness and debt, that borrower could potentially buy a $ 288,500 home.

Buying a home with $ 100,000 salary and good credit

Our second borrower also makes $ 100,000 a year.

However, this person's credit score is 700 and they only pay $ 250 in non-mortgage debt each month. You can also save 15% on the house.

Because of these factors, they may get a lower interest rate – maybe 3.5% – and qualify for a home that costs up to $ 561,000.

A salary of $ 100,000 and good credit will buy a home over $ 500,000

Income: $ 100,000 / yearCredit score: 700Deposit: fifteen%Debt: $ 250 a monthInterest rate: 3.5% *Estimated house value: $ 561,000

* The interest rates shown are for example purposes only. Your own rate will be different

Buying a home with $ 100,000 salary and good credit

The third borrower has an excellent credit score of 760. This person also has no debt and is willing to put 20% on the house.

Like the first two home buyers, they make $ 100,000 a year. However, you have received an interest rate of 3.25% and your potential mortgage amount is approximately $ 721,000.

A salary of $ 100,000 and good credit will buy a home over $ 700,000

Income: $ 100,000 / yearCredit score: 760Deposit: 20%Debt: $ 0 per monthInterest rate: 3.25% *Estimated house value: $ 721,000

* The interest rates shown are for example purposes only. Your own rate will be different

Note that for each of these scenarios, an assumed homeowner insurance rate of $ 1,200 per year, which is the US average, along with a tax rate of 0.78%.

All loan amounts were calculated using The Mortgage Reports mortgage calculator.

Your own budget will depend on your actual mortgage rate, insurance rates, local property taxes, homeowners association (HOA) fees, personal mortgage insurance, and other factors.

But you can see that a high credit score, low DTI, and high down payment greatly increases the amount of home you can afford on a $ 100,000 salary.

Find Out How Much Home Ownership You Qualify For (Oct 5, 2020)

Factors That Determine How Much Home You Can Afford

Income is an important factor when applying for a mortgage.

If you earn a salary of $ 100,000 a year, lenders will weigh it that heavily on your mortgage application.

It indicates that you likely have the income necessary to cover a decent mortgage payment.

However, lenders don't just look at income when they qualify you for a home loan. They also look:

Here is what each of these factors means to a lender.

Credit score and debt

Lenders want to make sure that you have good credit management and on-time payments, and that you are not paying too many other debts on top of a mortgage.

For the best mortgage rate, aim for a credit score of 720 or higher and a DTI rate below 36%.

These indicators show that you are a responsible borrower who is unlikely to default on your mortgage loan.

Down payment and LTV

Additionally, lenders take your down payment and LTV into account when deciding which mortgage programs you will qualify for and how low the interest rate you will get.

To get the best mortgage rate, aim for a 20% down payment. While not required, a higher deposit will lower your rate and increase your purchasing power.

The higher your down payment, the less risk the lender takes as you ask for less money. This means a lower rate and a bigger budget for home buying.

The LTV is a similar metric that measures how much you borrow and how much the house is actually worth.

The amount of your down payment has a direct impact on the LTV. The more you deposit, the less you need to borrow.

Low down payments are always an option

A “major borrower” would have a credit score of over 720 in the eyes of a lender, a debt-to-income ratio of less than 36%, and a down payment of 20% to support their $ 100,000 salary.

However, these things are by no means required.

You can get a good mortgage for less money. Most lenders offer low or no down payment mortgages.

In some cases, it is also possible to buy a home with a credit score of 580 or more and a DTI of up to 50%.

But each of these elements determine how much you can borrow.

What You Need To Know About Buying A Home For $ 100,000 Salary

Your salary affects not only how much you can borrow on a mortgage, but also the type of loans you can take out.

Income limits for mortgage programs

Some programs, such as the USDA Zero Down Mortgage, have income restrictions on qualifying.

In most parts of the country, the income for taking out a USDA loan cannot exceed $ 86,850. However, in areas with high home values, this limit increases to $ 212,550.

Note that these limits apply to household income, not just that of the borrower. If you make $ 50,000 per year and your spouse makes $ 40,000, you will be excluded from the USDA program because your total income exceeds $ 86,850.

Fannie Mae's HomeReady loan and the potential Freddie Mac & # 39; s Home loan – both of which allow a 3% reduction – also enforce income limits.

Income limits for down payment assistance

Also, if you make $ 100,000 per year, you may be banned from some Down Payment Support (DPA) programs.

There are many DPA programs across the country, including at the state and local levels. Therefore, the admission criteria vary from place to place.

However, some programs limit support to a certain income threshold. So if you are relying on DPA when buying a home, make sure you understand the requirements before including them in your plan.

There are also credit limits to consider

One last word on the limits. Even if you apply for a traditional loan with no income limit, the value of your home cannot exceed a certain amount of money – called compliant loan restrictions.

These limit values ​​are set annually by the federal government. Mortgages that exceed these limits are considered "jumbo mortgages" and are not guaranteed by the government.

The compliant credit limit for most US states for 2020 is $ 510,400, but it can increase to $ 765,600 in high-cost areas.

Mortgage pre-approval confirms your budget for home buying

It is a good idea to find out how much home you can afford before you start shopping so that you don't fall in love with a property that you cannot buy.

In addition to getting a quote using an online mortgage calculator, you can also get pre-approval from a lender to get a better idea of ​​what they might offer you.

That way, you can search for homes in your price range and reassure your real estate agents and sellers that you are on the right track when viewing homes.

You can start by requesting today's rates from top lenders.

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