If you make $70,000 a year you may be asking yourself, “Can I buy a house with a $70K salary?” The answer is yes, but the price of the house you can afford depends on many factors.
Your debt, down payment and current interest rates.
By understanding these and how they affect your borrowing power you can make a better decision.
How much mortgage can you get on a $70K salary?
What is the Mortgage Affordability on a $70K Salary?
On a $70,000 salary your borrowing power is around $350,000 to $390,000 depending on your overall situation.
This is assuming you have minimal debt and a good credit score.
With 20% down payment you could afford a house priced between $400,000 and $490,000.
Your monthly mortgage payment would be around $1,500 to $2,000, depending on loan term and interest rates.
Knowing what percentage of salary should go to mortgage can help you plan your budget better.
Debt-to-Income Ratio
Lenders use your debt-to-income (DTI) ratio to determine how much mortgage you can afford. Ideally, your DTI ratio should be 36% or less.
For someone earning $70,000 a year this is $2,100 a month in housing expenses. If you have monthly debt payments such as credit card debt or car loans these will reduce the amount you can borrow.
Budgeting and saving for a house on a $70K salary
20% Down Payment
A 20% down payment is recommended to avoid private mortgage insurance (PMI) and better loan terms. On a $400,000 house, this would be $80,000.
If 20% is hard to save you can do a smaller down payment but keep in mind this will increase your monthly payments and may require PMI which will add to your overall costs.
You might want to explore how to save money on a low income, which can offer practical tips to help you reach your goal.
Additional Costs
In addition to your mortgage consider other costs such as property taxes, home insurance and closing costs. These costs can add up and should be factored into your budget from the start.
Use a mortgage calculator to work out these costs and see how they fit into your monthly budget.
Where can you buy with a $70K salary?
Affordable Suburbs and Regions in Australia
A $70,000 salary may not go far in Australia’s biggest cities but it can still get you a house in more affordable suburbs.
For example, in Western Australia, suburbs like Osborne Park offer affordability and proximity to Perth.
In Queensland, areas like Logan Central offer affordable housing with good access to Brisbane.
To see what property can you buy with the average salary, it’s worth exploring different regions.
Urban vs Regional Property Prices
You may also consider buying in regional areas where property prices are lower. This could get you a bigger house or a property with better amenities than what you’d find in a more expensive urban area. But you need to weigh this against longer commutes and fewer job opportunities.
How do you improve your affordability on a $70K salary?
Boost Your Borrowing Power
You can boost your borrowing power by reducing your monthly debt payments, increasing your down payment and improving your credit score.
You can also shop around for lenders as different lenders will have different borrowing limits based on their criteria. Speak to a mortgage broker like Soho Home Loans to see what options you have.
Government Grants and Assistance
First homebuyers may be eligible for government grants and payment assistance programs which can help with the upfront costs of buying a house.
Check what’s available in your state or territory to maximise your affordability. When you’re ready, you can search for a home to buy that fits your budget.
Bottom line
You can buy a house on a $70,000 salary but it requires planning and budgeting. Know your borrowing power, manage your debt and look at more affordable areas and you can find a house that suits your budget.
And remember, working with a mortgage broker or financial advisor will help you through the process and make the right decisions for you.
FAQs on ‘Can I Buy a House with a $70K Salary?’
How much can you afford to borrow for a home on your salary?
The amount you can afford to borrow depends on your gross income and financial commitments. For example:
- With a gross income of $50,000, your borrowing capacity is approximately $143,000, which allows you to purchase a property valued at around $179,700 with a 20% deposit.
- If you earn $75,000, you could borrow about $215,700, enabling you to buy a property worth approximately $269,600 with a 20% deposit.
- With a $100,000 income, your borrowing capacity increases to about $287,600, letting you purchase a property valued at around $359,500 with a 20% deposit.
How much do you need to earn to borrow $800,000?
To borrow $800,000, you would typically need an annual salary of around $128,000.
How much do you need to earn to buy a house in Australia?
In Sydney, for example, to buy a two-bedroom house, you’d need to earn around $192,400 per year. For a three-bedroom house, your income should be about $217,800, and for a four-bedroom house, approximately $281,100.
How much do I need to earn to borrow $1 million?
For a couple with a combined income of $200,000 and moderate expenses, their borrowing power could range from $1 million to $1.25 million.
How do people afford houses in Australia?
In cities like Melbourne and Sydney, you would need to earn significantly more than the average household income to afford a median-priced house. For example, in Melbourne, a household would need to earn over $180,000, while in Sydney, the required income is around $280,000.
How much do I need to earn to borrow $600,000?
To comfortably afford a $600,000 mortgage with a 30-year term at 6.19% interest, your monthly household income after tax should be at least $12,236.40.
How much is a $600,000 mortgage monthly?
Depending on the interest rate and loan term, monthly repayments for a $600,000 mortgage could range from approximately $3,516.70 to $6,966.51.
What is the monthly payment on a $75,000 loan?
The monthly payment on a $75,000 loan varies widely depending on the interest rate and loan term. For example, with an APR of 36% over one year, the monthly payment could be as high as $7,535.
