However, keep in mind that many experts predicted home prices would fall in 2023, along with lower interest rates, but neither happened. So now might be a good time to work on your finances so that when prices and rates do drop (and we hope they will), you'll be ready.
The federal funds rate was slashed 1 point in 2024, but don't expect mortgage rates to fall below 5.5%, based on historical data. If you can afford a down payment, closing costs, mortgage payment, taxes, insurance and maintenance costs, buying now can build you equity, with the option to refinance if rates fall.
If you're an aspiring homeowner, you may be asking yourself, “How much house can I afford a with $70K salary?” If you make $70K a year, you can likely afford a home between $290,000 and $360,000*. That's a monthly house payment between $2,000 and $2,500 a month, depending on your personal finances.
Renters come out ahead in at least seven major cities in California; there, long-term renting is cheaper than owning a home. Renters save $900,540 on average in California over a 30-year period. On average, owners saved $175,811 over a 30-year period.
Traditionally, homebuyers have been advised to pay 20% of the total cost of the home for a down payment. However, many buyers do not pay that large of a downpayment. According to the National Association of Realtors (NAR), the average down payment for first-time homebuyers in 2023 was 8%.
How much should you spend on rent? One popular guideline is the 30% rent rule, which says to spend around 30% of your gross income on rent. So if you earn $4,000 per month before taxes, you could spend up to about $1,200 per month on rent.
To afford a $700,000 house, you typically need an annual income between $175,000 to $235,000, depending on your financial situation, down payment, credit score, and current market conditions. However, this is a general range, and your specific circumstances will determine the exact income required.
The 28% rule, 35/45 model and 25% rule are common ways of calculating how much a person can afford to pay toward their mortgage each month, according to Chase Bank. Under the first rule, a homeowner would aim to spend 28% or less of their monthly gross income on their mortgage payment.
If you make $70,000 a year, your hourly salary would be $33.65.
Today's rates seem high compared with the recent 2% rates of the pandemic era. But experts say getting below 3% on a 30-year fixed mortgage is unlikely without a severe economic downturn.
If your credit score is strong, your employment is stable and you have enough savings to cover a down payment and closing costs, buying now can still be a smart move. But if your personal finances are not ideal at the moment, or if home values in your area are on the decline, it might be better to wait.
That cost depends on numerous factors like inflation and real estate trends. According to the Census, homes sold for a median price of $420,700 in January 2024. Thankfully, you don't need to pay off that amount all at once. A down payment that's 20% to 25% of a home's value can help you secure a property.
Prices usually go down in late summer and early fall, since fewer buyers are looking at homes and inventory is still pretty high after the busy spring selling season. On the flip side, the worst time to buy a house is typically the late spring and early summer (May through July).
Bottom Line. As rates came down at the end of the summer, sellers started to trickle back into the market, which means buyers have more choices right now. And working with a trusted local real estate agent is the best way to take advantage of your new options before they're all scooped up.
Historically, the biggest advantage of owning a home is long-term financial security. For decades, home ownership in America represented stability because the housing market almost always went up in value, rewarding homeowners with equity and also a way to borrow money, should the need arise.
The Bottom Line. On a $70,000 salary using a 50% DTI, you could potentially afford a house worth between $200,000 to $250,000, depending on your specific financial situation.
An individual earning $60,000 a year may buy a home worth ranging from $180,000 to over $300,000. That's because your wage isn't the only factor that affects your house purchase budget. Your credit score, existing debts, mortgage rates, and a variety of other considerations must all be taken into account.
With $2,000 per month to spend on your mortgage payment, you are likely to qualify for a home with a purchase price between $250,000 to $300,000, said Matt Ward, a real estate agent in Nashville. Ward also points out that other financial factors will impact your home purchase budget.
A person who makes $50,000 a year might be able to afford a house worth anywhere from $180,000 to nearly $258,000. That's because your annual salary isn't the only variable that determines your home buying budget. You also have to consider your credit score, current debts, mortgage rates, and many other factors.
If you make $70k a year, you can afford to spend about $1,633 on a monthly mortgage payment — as long as you have less than $500 in other monthly debt payments. You may be able to afford a $302,000 home in a low cost of living area. You may be able to afford a $247,000 home in a high cost of living area.
According to the 28/36 rule, you should spend no more than 28% of your gross monthly income on housing and no more than 36% on all debts. Housing costs can include: Your monthly mortgage payment. Homeowners Insurance. Private mortgage insurance.
This means that families earning between the poverty threshold ($27,750 for two working adults, two children on average in 2022) and the living wage ($104,077 on average for two working adults, two children per year before taxes) may fall short of the income and assistance they require to meet their basic needs.
For example, if you're making $20 an hour, assuming you work a standard 40-hour workweek, your monthly income is $3,200. Based on the 50% needs category, you should aim to spend no more than 30% of yours income on rent, which comes out to $960 per month.
Those will become part of your budget. The 50-30-20 rule recommends putting 50% of your money toward needs, 30% toward wants, and 20% toward savings. The savings category also includes money you will need to realize your future goals.