Buying a house is one of the most important financial decisions that you make in your life. If you do not decide wisely in this case you might get into big trouble and even become a house poor.

In this short article, I’m going to show you a rule of thumb and tell you how much you can actually afford.

What can you afford based on your income?

Based on how much you earn this can be different. However, you need to spend approximately 30 percent of your net pay or pay salary on the housing cost. This includes things like property taxes, mortgages, insurance, and so on. You may ask why this is so? Well, that is what the banks are looking for. 

Here is exactly how much house you can afford on your salary

You should roughly spend four times your salary on a house. You heard right! Let’s say if you earn $50,000 you should multiply it by 4 and that is generally what you can qualify for. 

Different salaries mean different housing affordability 

So if you are making $50,000 we can assume you’re going to afford a $200,000 house. You can buy a small house, like 1,300 square feet at that price. You can consider this as a starter house though.

If you earn like $80,000 per year, you can afford a house at a price of $320,000. $125,000 salary income would be like a $500,000 home. You can afford quite a big house which is above 3000 square meters at this price.

You can check your own salary and multiply it by four and see how much house you can afford.


In this short article, I have shown you a good rule of thumb. However, this is not all you should consider when buying a house. You need to exactly right down all your expenses and then see how much your net pay or take-home pay is. Then you can proper actions, just be careful not to become a house poor by taking all the necessary action.