Buying a house is an exciting milestone, but it also requires careful planning and budgeting. If you’re considering purchasing a $350,000 home, you probably have questions about how much money you’ll need to qualify and cover expenses. This comprehensive guide covers everything you need to know to financially prepare for buying a $350K house.
Factors That Determine How Much House You Can Afford
When figuring out how much home you can afford, there are several key factors to consider:
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Down Payment Amount: Generally, you’ll need around 10-20% for the down payment. On a $350K home, that’s $35K-$70K. The more you put down, the lower your monthly payments.
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Credit Score: Your credit score impacts the mortgage interest rate you’ll qualify for. Aim for a score of 740 or higher for the best rates.
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Debt-to-Income Ratio: Lenders look at your total monthly debt payments compared to gross monthly income. Aim for a DTI of 36% or less.
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Other Costs Don’t forget to budget for closing costs (2-5% of home price), moving expenses, and repairs/maintenance costs
Calculating the Income Needed for a $350K Home
A common mortgage guideline is the 28/36 rule – your housing costs shouldn’t exceed 28% of your gross monthly income, and total debt including housing shouldn’t exceed 36%.
For a $350K home purchase with 20% down and a 30-year mortgage at 7.5% interest, the principal and interest payment would be around $1,957 per month. With estimated property taxes, insurance, and other costs, your total monthly housing costs would be approximately $2,500.
To keep housing costs under 28% of your income you would take the annual costs of $30000 ($2,500 x 12 months) and multiply it by 3 to get $90,000.
So if you follow the 28/36 guideline, you would need an annual income of around $90,000 to comfortably afford a $350K home. This doesn’t include your down payment and closing costs, so be sure to factor those in as well.
Other Costs to Budget For
Here are some other expenses to keep in mind beyond just the mortgage payment when buying a home:
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Down Payment: 20% down on a $350K home is $70,000. Save as much as possible for the down payment, but programs exist if you can’t do 20%.
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Closing Costs: Estimate 2-5% of the purchase price. On a $350K home, that’s $7,000-$17,500. Shop around for the best rates.
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Inspection/Appraisal Fees: Budget $500-$1,000 for inspections and appraisal.
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Home Insurance: National average is $100-$300 per month. Get quotes specific to your area.
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Property Taxes: Average 1-2% of the home value annually. Verify with your local assessor’s office.
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Maintenance and Repairs: Budget 1-3% of the home’s value annually for maintenance costs.
Tips for Affording a $350K Home
Here are some tips to make an expensive $350K home purchase more affordable:
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Increase your income with a promotion, second job, or side gig if needed.
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Save for a larger down payment to reduce monthly costs.
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Look into first-time homebuyer programs that offer down payment assistance.
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Consider government-backed FHA loans that allow down payments as low as 3.5%.
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Buy below your maximum budget to have financial breathing room.
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Opt for a longer mortgage term like 30 years to lower payments.
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Make extra mortgage principal payments when possible to pay off the home faster.
The Bottom Line
Buying a mid-priced $350,000 home is feasible if you properly budget and prepare your finances. While the down payment and closing costs require major savings, the monthly mortgage payments may be manageable if you follow lending guidelines and keep your other debts low. Crunch the numbers thoroughly and consult a mortgage professional to determine the optimal home price range for your unique financial situation. With some discipline and smart planning, you can make your $350K homeownership dream a reality.
How much of your income should go toward a mortgage?
The 28/36 rule is a good benchmark: No more than 28% of a buyer’s pretax monthly income should go toward housing costs, and no more than 36% should go toward housing costs plus monthly debt payments. Housing costs include a mortgage payment, property taxes, home insurance, mortgage insurance and homeowners association fees. Debt payments include monthly bills for student loans, car loans, credit cards and other debt.
But you can qualify for a mortgage with higher housing and debt costs. For example, FHA loans, which are backed by the Federal Housing Administration, allow housing costs of up to 31% of pretax income and debts plus housing costs of up to 43% of pretax income. In certain cases, there may be a little more flexibility.
Mortgage income calculator help
Heres what to know about the factors the calculator uses.
Home price: Housing prices vary widely. Talk to a local real estate agent or check out listings online to estimate how much youd pay for the type of home you want.
Down payment: This is the amount you pay up front for a property. The required down payment varies by the type of mortgage. The more you put down, the lower your monthly mortgage payment.
Loan term: The 30-year term is the most common because it has lower monthly payments than the 15-year term does, but the total cost of interest is higher over the course of the mortgage.
Interest rate: Average mortgage rates vary from day to day, and the rate youre offered will depend on your down payment, credit score, debt and income. Check the latest mortgage rates to estimate.
Recurring debt payments: Lenders use this information to calculate a debt-to-income ratio, or DTI. A good DTI, including your prospective housing costs, is under 36%, which means less than 36% of your income would be tied up in debt payments. But you can still qualify with a higher ratio.
Private mortgage insurance: If you put less than 20% down for a conventional loan, you typically will have to pay for private mortgage insurance, which will be included in your monthly mortgage payment.
Property tax and home insurance: As a homeowner, youll have to pay property tax, and the lender will require you to buy home insurance. The cost for both is usually included in your monthly mortgage payment.
Homeowners association fee: A homeowners association, or HOA, is a resident-run group that governs a neighborhood, condominium complex or other housing development. The association sets rules and collects fees from property owners to pay for amenities, such as pools, parks and walkways. If the home you buy is in an HOA, the fee will count as part of your housing costs.
How Much Do You Need To Make To Buy A 350k House
FAQ
How much do I need down for a 350k house?
Down payment amounts for a $350,000 house can range from 0% to 20% or more. The required down payment depends on the type of mortgage you choose. Conventional loans typically require 3-20% down for a $350,000 house. Government-backed loans like FHA, VA, and USDA have different down payment requirements.
What income do I need for a 350k mortgage?
How much should my salary be to buy a 300k house?
With a 5% down payment and an interest rate of 6.877% (the average at the time of writing), you will want to earn at least $6,750 per month – $81,000 per year …
What is the average mortgage payment for a 350k house?
On a $350,000, 30-year mortgage with a 6% annual percentage rate (APR), you can expect a monthly payment of $2,098.43, not including taxes and interest (these vary by location and property, so they can’t be calculated without more detail). The payment would jump to $2,953.50 for a 15-year loan.