How much house can I afford with a $150k salary? Smart guide

What you’ll learn

— Techniques for estimating how much you can afford to spend on a property

— The factors other than income that affect home affordability, like credit scores and interest rates

— Popular mortgage options

— Ideas for making your purchase more affordable without increasing your income

How much house can you afford with a $150k salary? On that income, you’re likely in a solid position — and maybe even daydreaming about a new place in a neighborhood you’ve been eyeing. But income is only one piece of the affordability puzzle. Your credit score and down payment play a major role in shaping what’s truly within reach.

In this guide, you’ll learn how to estimate your homebuying price range and how to save money on your mortgage.

What housing prices can I afford on $150k?

At a $150k salary, you’re looking at a wide range of about $545,000–$780,000, though there’s really no one-size-fits-all answer to this question.

Lenders examine many other parts of your financial situation to decide the rates and terms to offer you. Elements like your location, debt-to-income (DTI) ratio, and the size of your down payment help you set a realistic budget.

While you may not be able to pinpoint exact figures, there are techniques for estimating them. For instance, the 28/36 rule is a simple way to find a starting point for what a $150k salary mortgage might get you.

...in as little as 3 minutes – no credit impact

The 28/36 rule for estimating homebuying affordability

The 28/36 rule gives you a broad sense of what house you can afford on $150k a year. The 28/36 rule says you should aim to put no more than 28% of your gross monthly income into your projected housing expenses.

Housing expenses come first. These cover costs like:

— Mortgage principal

— Mortgage interest

— Property taxes

— Homeowners insurance

— Homeowners’ association (HOA) fees

Next come your debts, including mortgage payments, credit cards, and any other accounts you’re paying down regularly. Ideally, all these expenses combined should make up no more than 36% of your gross monthly income.

What do my monthly mortgage payments go toward?

A typical mortgage payment consists of four parts: principal, interest, taxes, and insurance (also called PITI):

— Principal is the amount you borrowed; the principal portion of each payment reduces that balance.

— Interest is the cost you pay to the lender for borrowing that money, calculated as a percentage of your remaining principal balance.

— Property taxes fund public services like schools and road maintenance. Local governments collect them, so costs vary by region. 

— Homeowners’ insurance protects your home and belongings from covered events like fires and theft.

Estimating each of these components by hand is a time-consuming process. With Better’s free Mortgage Calculator, you can enter a few details and get a clear cost breakdown in just a few clicks.

...in as little as 3 minutes – no credit impact

What other factors impact how much house you can afford on a $150k salary?

How affordable a home is depends on more than just your salary. Key factors to consider include the following.

Location

An area’s average cost of living affects how much house you can afford. Say you’re looking to spend $750,000 on a single-family home. In San Diego, you might be able to get a three-bed, two-bath property at 1,300 square feet. But in Tulsa, that same budget can get you upwards of four bedrooms, four bathrooms, and 4,000 square feet.

Interest rate

Interest rates represent the cost of borrowing money, and they have a huge impact on how much you’ll pay throughout your loan term. Because mortgage balances are often large, even a seemingly small difference in rate can add up to thousands of dollars over time.

Multiple factors impact interest rates, including market conditions, lender expectations, and homebuyer qualifications. For instance, people with higher credit scores who put more down typically have more favorable rates.

Credit score

Lenders use your credit score to assess how likely you are to make your payments on time. A higher score usually helps you qualify for better rates and more favorable terms.

Down payment

Some conventional loan programs allow down payments as low as 3%, but a bigger down payment gives you more equity in your home from the start and reduces your monthly mortgage payments.

DTI ratio

This metric looks at the relationship between your monthly debt payments and your gross monthly income. A high DTI means more of your income is going toward debt, which can signal to lenders that you might have less capacity to manage additional loans.

Most lenders prefer to see a DTI of under 36%, meaning the total of your monthly debts including your estimated monthly mortgage payment will be less than 36% of your monthly gross income. That said, Better does offer loans that could allow a DTI of up to 50%. 

Insurance

For conventional loans, providers typically require private mortgage insurance (PMI) when your down payment is less than 20%. PMI protects the lender in case a borrower defaults on a loan. You can get PMI canceled once your equity reaches 20%.

Two home affordability scenarios with a $150,000 salary

Here are two practical examples with different terms to show how the varying financial profiles affect affordability. For both, we’ll assume a $600,000 mortgage. Even these relatively similar financial profiles produce very different monthly payments, highlighting how every factor — not just income — affects affordability.

Scenario 1: Great financial profile

— Down payment: 20%

— Credit score: 780 (very good)

— Interest rate: 6.8%

With these terms, the monthly payments are about $3,129. That leaves plenty of breathing room for the $3,500 target the 28/36 rule suggests.

Scenario 2: Good financial profile

— Down payment: 10%

— Credit score: 680 (good)

— Interest rate: 7.25%

This combination results in monthly payments of roughly $3,784. It’s over the $3,500 budget, but it might still be doable if you have minimal overall debt burden.

Home financing options for a $150,000 salary

Thoroughly exploring financing options helps you make the most cost-effective choice, including these common types:

— Conventional loans: These are the mortgages most people know — private loans that non-government lenders offer. They generally follow standard lending guidelines and can come with either fixed or adjustable rates. As an industry-leading conventional loan provider, Better lets you get pre-approved for a competitive rate in as little as three minutes.

— FHA loans: Federal Housing Administration (FHA) mortgages come with lower minimum credit score requirements and smaller down payment options than many conventional loans. This makes it easier for buyers with less-than-perfect credit and limited savings to purchase a home.

— VA loans: Eligible veterans, active-duty service members, and some surviving spouses can use Department of Veterans Affairs (VA) loans to buy a home, often without a down payment or PMI.

How to boost affordability without increasing your income

There are several ways to make homeownership more affordable without getting a raise, such as:

— Shopping around for loans: Applying widely and carefully comparing offers can save you a significant amount of money. Remember: even a small difference in interest rates can cost (or save) you thousands over the life of a mortgage.

— Working on your credit score: A solid credit score is the key to better rates. Pay bills on time and avoid opening multiple new accounts at once to gradually improve your rating.

— Paying off high-interest debt: Debt with high interest rates, like credit cards and auto loans, takes up a large portion of your monthly budget. Paying it down frees up room for monthly mortgage payments and can improve your loan terms.

— Adjusting your location: If you’re not married to one area, choosing a location with a more favorable housing market could save you a bundle.

Make your dream home a reality on a $150,000 salary with Better

If you make $150k a year, you can afford a house between about $545,000–$780,000. That’s a broad range, so it’s important to shop around and compare options carefully.

But that doesn’t mean you need to spend hours playing phone tag with lender reps. Get pre-approved and see what your homebuying budget is with Better’s seamless online application. Have questions along the way? Our support team is available 24/7 to help.

Get started with Better today, and make homeownership a reality — without breaking the bank.

...in as little as 3 minutes – no credit impact

FAQ

How does my credit score affect how much house I can afford with a $150k salary?

A higher credit score signals to lenders that you’re a reliable borrower, which can unlock better rates and more mortgage options.

What are the smartest ways to afford a nicer home if I make $150k a year?

Here are three ways to look at it:

— Location flexibility: Looking in areas with lower housing prices can give you access to nicer properties without changing your budget.

— Home type flexibility: Considering a more affordable type of home, like a condo rather than a single-family, can widen your options.

— Down payment size: If you have the funds, making a bigger down payment reduces the loan amount (and the interest you’ll pay over time), making a more expensive home easier to afford.