What Income Do I Need To Buy A House?

What Income Do I Need To Buy A House?
by Kevyn Pitts - June 8, 2022,

You probably do not need as much money as you believe to finance a house. The specific price, however, is determined by the loan program you select, the amount of your down payment, and your credit score, among other criteria.

Prime borrower (20% down)

Prime borrowers are individuals who qualify for a traditional loan with the best credit scores (think 740 or higher) and significant down payments. To purchase a new home, you do not need to be a high-risk borrower. Even with a low or moderate salary, having strong credit and a 20% down payment will make homeownership more attainable.

FHA Borrower loan (3.5% down)

FHA loans are designed for borrowers who have poor credit and/or a low income. FHA mortgages are more flexible than conventional loans when it comes to credit history and debt-to-income ratio (DTI), making it easier to qualify. This FHA loan illustration depicts a borrower with a good credit score (640 or higher) and a little down payment.

Borrower with a VA or USDA loan (0% down)

VA and USDA loans, which are backed by the Departments of Veterans Affairs and Agriculture, respectively, have a unique feature in that they do not demand a down payment. Borrowers must be veterans or active-duty service members to qualify for a VA loan.

To qualify for USDA financing, you must purchase a home in a designated 'rural area' (many suburbs and small towns are eligible). Because USDA and VA borrowers do not put any money down and consequently have a larger sum to pay off throughout the loan period, they may require a higher income than those who take out a conventional loan.

For a VA or USDA loan, there is no minimum income requirement. The USDA, on the other hand, imposes income limitations that limit the amount of household income that can be earned while still qualifying.

What factors influence your home-buying budget?

As you can see, the amount you will need to buy a house is heavily influenced by the loan program you select, the amount you can afford to put down, and your mortgage rate. Your previous debts, particularly your debt-to-income ratio, as well as your credit score, have a significant effect.

In general, the better your credit score is, the cheaper your interest rate. This allows you to buy a more expensive home with less money. If you are concerned that your salary is insufficient to purchase a home, the best things you can do are improve your FICO score.

You can save as much as possible for a larger down payment. You do not need to put down 20%, but any amount helps reduce your loan amount and expand your home-buying price range.

If you are interested in more articles like this, here’s one about how you get most money out of selling a house as-is.


  • Kevyn was Rory's first protege and has proved himself worthy of his title as a real estate expert through his years of working in the company. He makes sure we get the latest real estate updates and shares his insight to our readers on which investments they should keep an eye on.

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