How Much House Can I Afford on $80,000 a Year?

Knowing your yearly income is one component of estimating a potential mortgage amount. It’s a good starting point, too. Lenders need to know an applicant’s yearly income, but other factors play a role as well. For example, monthly expenses, monthly debt payments, and other expenses factor into the equation.  Let’s take a look at how much house can I afford on $80,000 a year?

Income

On an annual income of $80,000 after-tax, a lender may offer you a mortgage of $1.75 million. This assumes that the applicant’s credit score is at least average. It also assumes that there are no outstanding debts owed. The applicant’s expenses are also zero. At 30 years and a 4% interest rate, you’re looking at a monthly repayment amount of $5,600. 

Expenses

Now, let’s factor in some expenses. The estimated monthly expense amount for a single Australian is almost $3,000 with rent or mortgage. The average monthly repayment amount is $2,000, so in this example, we’re going to list $1,000 in the expenses column.

An annual after-tax $80,000 income with $1,000 in monthly expenses nets you a mortgage of just under one million. With an interest rate of 4% over 30 years, you’ll see a monthly repayment of $4,800. 

For this example, we lumped all expenses in the same category. Some lenders divide expenses into personal, debt, and other. Our Mortgage House home loan calculator is free to use online. It allows you to see other scenarios based on your inputs.

How Much House Can I Afford Conclusion

When you ask how much house can I afford on $80,000 a year? you now see that the answer is it depends. Annual income is the starting point. Once you factor in your expenses and current debt payments, you see a clearer picture. If you lower your expenses, you see that you can borrow more for less.