When it comes to determining how much you should earn to afford a $300,000 house, the most frequently used rule of thumb is that your income should be two to three times the cost of the home you wish to buy. In other words, if you want to buy a $300,000 house, you should aim to earn between $150,000 and $225,000 annually.
Here are some additional factors to keep in mind when considering the affordability of a $300,000 home:
Down payment: Depending on the type of mortgage you qualify for and your lender’s requirements, you may need to put down between 3% and 20% of the purchase price as a down payment. That means you’ll need anywhere from $9,000 to $60,000 saved up to buy a $300,000 house.
Debt-to-income ratio: Your debt-to-income ratio (DTI) measures how much of your monthly income goes toward paying off debt. Lenders typically prefer to see a DTI of 43% or less. To qualify for a $300,000 mortgage, your monthly debt payments should ideally not exceed $1,290.
Closing costs: In addition to your down payment, you’ll also need to pay closing costs, which typically range from 2% to 5% of the purchase price. For a $300,000 house, you can expect to pay between $6,000 and $15,000 in closing costs.
Keep in mind that these are just rough estimates and that other factors, such as your credit score and the interest rate offered by your lender, can also affect how much you’ll need to earn to afford a $300,000 house.