To afford a $300,000 house, you generally need an annual income of around $81,000. This estimate assumes a 5% down payment, a 30-year fixed mortgage with an interest rate near 6.877%, and includes typical costs like property taxes, homeowners insurance, and private mortgage insurance (PMI)
. Here are some key details:
- At a 6.877% interest rate and 5% down payment, the estimated total monthly housing payment is about $2,445, requiring roughly $6,750 per month or $81,000 per year in income
- If you have higher monthly debts, your required income will increase accordingly.
- Increasing your down payment reduces the income needed. For example, a 10% down payment lowers the needed income to about $77,000, 15% down to $73,000, and 20% down to $68,000 annually
- Mortgage rates currently hover around 6.8% to 6.9% for a 30-year fixed loan, which aligns with the assumptions used in these calculations
Using the common 28% rule (no more than 28% of gross income on housing costs), a monthly payment of about $2,445 fits with an $81,000 yearly income target
. In summary, to comfortably afford a $300,000 home today, plan on earning at least $80,000 to $85,000 annually, depending on your down payment size and other debts.
