How Much House Can I Afford with a $150K Salary? | 2025

I make $150,000 a year: How much house can I afford?

Knowing how much you can afford before starting your home search can make the process easier and help you focus on homes within your budget. For example, if you’re wondering “how much house can I afford with a $150K salary", understanding your income is a key starting point.

However, although your income plays a big role in how much you can spend on a house, other factors also affect what you can afford.

In this article (Skip to...)

• If I make $150,000 a year, what mortgage can I afford?
• $150K income mortgage payment breakdown
• Maximum home purchase price by down payment
• Maximum home purchase price by mortgage rate
• Maximum home purchase price by debt-to-income ratio
• Strategies to increase your home buying power

If I make $150,000 a year, what mortgage can I afford?

If your annual income is $150,000, you should be able to afford a house between $546,400 and $778,200.

Why the sizeable difference? Because lenders look at more than just your income when approving you for a mortgage.

Two different homebuyers earning the same annual income of $150K could have completely different qualifying scenarios.

Here are some of the factors that influence how much you can borrow.

• Credit score: Higher scores can lead to better rates and larger loans.
• Down payment: A higher down payment reduces the loan amount needed.
• Debt-to-income ratio (DTI): Less debt leaves more room for a mortgage.
• Mortgage rate: Rates vary based on individual financial profiles.

So even though Person A and Person B earn the same income and have similar credit scores, Person A might qualify for a smaller loan because of their student and auto loans, while Person B, with fewer expenses, may qualify for more.

$150K income mortgage payment breakdown

Lenders typically adhere to the 28/36 rule when evaluating affordability, For the simplicity, let’s keep your housing costs at no more than 30% of your monthly income.

As an example, $150,000 annually equals $12,500 per month. $12,500 x .30 = $3,750 (your ceiling for monthly housing expenses).

If you bought a home for $557,900 and made a down payment of 5%, your loan amount would be $530,000. Using a mortgage loan amount of $530K with a mortgage of 6.5%, your monthly principal and interest rate payment would be approximately $3,350.

The target price for your home might end up being lower than expected because your monthly mortgage payment includes more than just the loan itself. Here’s what’s factored in:

• Interest: A significant portion of your payment, especially in the early years, goes toward interest on the loan.
• Property taxes: These vary depending on where you live and are added to your monthly payment.
• Homeowners insurance: Lenders require this to protect the property, and it’s often included in your mortgage payment.
• Private mortgage insurance (PMI): If your down payment is less than 20%, you’ll likely have to pay PMI. This protects the lender in the event of borrower default.
• Homeowners’s association (HOA): A group that manages a neighborhood. Homeowners pay fees to take care of shared spaces and services.

When all these costs are added, they reduce the amount available for the actual home price, meaning you might qualify for less than you expected.

Maximum home purchase price by down payment

Keep in mind that your down payment also plays a role in how much you can afford if you make $150,000 a year.

While a 20% down payment isn’t typically required, putting down that much can lower the loan amount, which may increase your purchasing power.

A larger down payment means you’re financing a smaller amount, which can result in a lower monthly payment and possibly a larger home price.

On the other hand, if you go with a lower down payment program, like an FHA loan that requires 3.5% or a conventional loan with 5%, you’ll be financing a larger portion of the home. This results in a higher monthly mortgage payment, which can reduce the amount you qualify for because your payment will likely exceed the 30% of your gross monthly income limit.

*Payments include an estimated monthly escrow payment of $400 and an interest rate of 6.5%. Home prices rounded to nearest $100.

Maximum home purchase price by mortgage rate

Likewise, current interest rates affect how much home you can afford. As a general rule of thumb, when interest rates drop, your purchasing power increases, meaning you can afford a more expensive home or enjoy a lower monthly payment.

On the other hand, when interest rates rise, your purchasing power decreases, and you may have to adjust your target home price to stay within budget.

This is why some homebuyers choose to wait for more favorable rates before entering the market. A lower interest rate can mean you get more house for your money or pay less each month, leaving you with more cash for other priorities.

* Payments include an estimated monthly escrow payment of $400. Home prices rounded to nearest $100 and assume a down payment of 5%.

Maximum home purchase price by debt-to-income ratio

Also, pay attention to your debt-to-income (DTI) ratio when buying a house. Many potential buyers don’t realize how auto loans, student loans, and even credit card debt can impact their purchasing power.

While you’re typically allowed to spend up to 30% of your gross monthly income on a mortgage payment, some lenders prefer that your total monthly debt (including your mortgage) doesn’t exceed 36% to 45% of your gross income.

In some cases, lenders may allow a higher DTI if you have compensating factors, such as a sizable savings account or a high credit score.

* Payments include an estimated monthly escrow payment of $400. Home prices rounded to nearest $100 and assume a down payment of 5%.

Strategies to increase your home buying power

Increasing your purchasing power can help you qualify for a larger loan. Here are a few strategies to consider:

• Save a larger down payment: Even if you can’t save 20%, aiming for 10% or 15% can still reduce the amount you need to finance, resulting in a lower monthly payment.
• Use gift funds: If you have family members willing to help, you can put gift funds from a relative toward your down payment—allowing you to increase it without draining your savings.
• Improve your credit score: Paying off high credit card balances, avoiding cosigning loans, and paying your bills on time can improve your credit score. A higher score means a better interest rate, which can lower your monthly payment and increase your purchasing power.
• Consider a different loan type: Look into loan programs that offer lower down payment options, such as FHA loans (3.5% down) or conventional loans (as little as 5% down). These help reduce the upfront cost needed to buy a home.

The bottom line

Although you can estimate your home buying budget, speaking with a lender is the only way to know what you can actually afford. They’ll consider key factors such as your salary, down payment, credit score, and current interest rates to determine your purchasing power. From here, they’ll help you find a comfortable price range so that you’re not overextended.

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