This is the house you could buy on a $70,000 salary in the USA

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Buying a house is a dream for many people, but it can seem out of reach, especially if you don’t earn a high salary or live in an expensive area. The median household income in the U.S. is $74,580, according to Census data.

While this may seem like a good amount of money, making it stretch enough to afford a home can be challenging. Let’s explore how much house you can afford on a $70,000 yearly salary and what factors you need to consider.

The 28/36 Rule

The 28/36 rule is a general guideline to help determine how much you can afford to spend on housing and debt. According to this rule:

You should spend no more than 28% of your income on housing costs.

You should spend no more than 36% of your income on total debt payments, including housing.

Here’s how it breaks down for a $70,000 annual salary:

$70,000 per year equals about $5,833 per month.

28% of $5,833 is $1,633.

This means your maximum monthly housing cost should be $1,633. Remember to include property taxes, home insurance, and HOA fees in this amount.

Affording a $240,000 Home

If you assume a 20% down payment on a 30-year fixed-rate loan at a 7% interest rate, you could afford a $240,000 home. This would require a $48,000 down payment, not including closing costs, home inspection fees, and realtor fees. Make sure to budget for all these expenses before committing to a home purchase.

Key Factors to Consider

Down Payment Amount

A higher down payment means a lower mortgage. Although spreading the payment over a few months might seem easier, a lower principal reduces your interest payments.

Credit Score

Improving your credit score can help you get a lower interest rate. A strong credit score makes you a less risky borrower, leading to better loan terms.

Debt-to-Income Ratio

Your debt-to-income (DTI) ratio should be no higher than 36%. Banks prefer a favorable DTI ratio when approving home loans. A higher ratio might be accepted but is not recommended.


The location of your home is crucial. Widening your search to cheaper areas or states can help you find more affordable options. As of August 2023, the national median home price was $407,100. A budget of $240,000 might limit your options in many areas, so flexibility is key.


If you can’t change your location, consider smaller homes. They are usually cheaper and can be a good starting point on the property ladder.

House Financing Options

Most people need to finance their home purchase. Here are some common loan options:

Conventional Loans

Conventional loans require a credit score of at least 620. They are the most common type of loan and can be obtained with a down payment as low as 3%.

FHA Loans

FHA loans are ideal for those with lower credit scores. A score between 500 and 579 requires a 10% down payment, while a score of 580 or higher needs only 3.5%.

USDA Loans

USDA loans are for low- and moderate-income borrowers in designated rural areas. If you’re open to living outside the city, this could be a good option.

VA Loans

VA loans require no down payment for qualified military service members, veterans, and surviving spouses.

Buying a home on a $70,000 salary is possible with careful planning and consideration of various factors like down payment, credit score, and location. By understanding your financing options and sticking to the 28/36 rule, you can make informed decisions and find a home within your budget.

Frequently Asked Questions

1. What is the 28/36 rule?

The 28/36 rule is a guideline suggesting you spend no more than 28% of your income on housing costs and no more than 36% on total debt payments.

2. How much house can I afford with a $70,000 salary?

Using the 28/36 rule, you can afford a monthly housing cost of $1,633, which translates to a $240,000 home with a 20% down payment and a 7% interest rate.

3. What factors affect home affordability?

Factors include down payment amount, credit score, debt-to-income ratio, location, and the size of the home.

4. What are the different types of home loans?

Common home loans include conventional, FHA, USDA, and VA loans, each with different requirements and benefits.

5. How can I improve my credit score?

Paying bills on time, reducing debt, and checking your credit report for errors can help improve your credit score.

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