How Much Should I Spend on a Home?

Figuring out how much you should spend on a home can be difficult, especially if you're a first-time homebuyer and you've never been through the process. The reality of buying a home is that it involves so much more than being able to afford the monthly mortgage payment.

This guide helps you navigate all the expenses involved in buying a home and offers income-based guidelines to help you get clear about what you can afford to spend. We'll also cover how strategic planning and saving for a house, and the support of tools from EarnIn, can help.

Understanding first-home affordability basics

Before you dive into home shopping, it helps to understand the basic guidelines many lenders use when reviewing applications. One common framework is the 28% housing expense ratio, which suggests keeping your total housing costs, including your mortgage, taxes, insurance, and Homeowner Association (HOA) fees, under about 28% of your gross monthly income.

Typical guidelines also reference a debt-to-income (DTI) ratio, where your total monthly debt payments ideally stay under 36%. These aren’t guarantees of approval, but they can help you gauge what you may qualify for based on your current financial situation and debt load.

You’ll also see lenders consider factors like your credit history, savings, and employment stability. Since each lender has its own criteria and conventional loan requirements, you may qualify for different loan amounts depending on who you work with. These numbers give you a starting point, not an absolute rule.

Here’s a general example of how income can relate to a typical loan amount:

Gross Annual Income	Typical Loan Amount (Approx.)
$50,000	$150,000–$180,000
$60,000	$180,000–$210,000
$75,000	$225,000–$260,000
$100,000	$300,000–$350,000

These ranges are estimates only. Your actual loan amount depends on your debts, credit, down payment, and lender requirements.

Now that you understand the basics, you can start breaking down the factors that shape your individual budget.

Key factors that determine your first-home budget

Once you know how affordability is typically evaluated, you can look more closely at the personal factors that determine what you can realistically spend. These include your income, your down payment savings, your existing debt, and your monthly expenses.

Using EarnIn’s mortgage calculator¹ can help you estimate different home-price scenarios and explore how your monthly payment might change based on your numbers.

Just keep in mind that every borrower is different. Lenders may weigh credit, income stability, loan types, and guidelines differently.

Income-based mortgage calculations

A common starting point for income-based mortgage calculations is the 2.5–3x annual income guideline, which suggests you may be able to afford a home priced at roughly 2.5 to 3 times your yearly income. It’s a simple way to estimate your range, but like all general rules, it doesn’t account for your unique expenses or debts.

For example, if you earn $60,000 a year, a rough estimate might suggest a home between $150,000 and $180,000. But this also depends on whether you’re budgeting based on your gross income or your take-home pay. Since your mortgage payments come from your post-tax income, it’s important to make sure your monthly numbers still feel comfortable once taxes and deductions are factored in.

Here’s an example table to help you visualize:

Annual Income	Estimated Home Price (2.5–3x)
$50,000	$125,000–$150,000
$60,000	$150,000–$180,000
$80,000	$200,000–$240,000
$100,000	$250,000–$300,000

These are just general guidelines, not guarantees of loan approval. Your actual qualifying range may differ based on debts, down payment, credit, and lender criteria.

Down payment requirements and options

Down payments can vary widely based on the loan type. Some first-time buyers qualify for down payments as low as 3%, while others choose 5% or 20% depending on their savings and goals. Putting down less can help you purchase sooner, but it may lead to higher monthly payments and require private mortgage insurance (PMI). A larger down payment reduces monthly costs but may take longer to save.

Let’s break down an example using a $250,000 home:

Down Payment %	Amount	Pros	Cons
3%	$7,500	Buy sooner	Higher monthly payments; PMI likely
5%	$12,500	Lower upfront cost than 20%	Still may require PMI
20%	$50,000	No PMI; lower monthly payment	Longer savings timeline

Actual down payment requirements depend on your loan type, credit history, and lender approval. First-time buyer programs may also offer support, but availability varies by location and qualification factors.

Hidden costs of homeownership

Beyond the down payment, you’ll want to plan for the hidden costs that come with buying and owning a home. This includes closing costs, which typically range from 2–5% of the purchase price. You could also face expenses like moving costs, immediate repairs, appraisal fees, home inspection fees, property taxes, homeowners insurance, and potential HOA fees.

Many first-time buyers find that they need an additional 5–8% of the home’s price to cover these upfront and first-year costs.

Here’s a suggested checklist to help you keep track:

Closing costs
Moving expenses
Initial repairs and upgrades
Property taxes
Homeowners insurance
HOA fees (if applicable)
Utility setup costs

These costs can vary significantly based on your location, lender, and the type of home you buy, but being aware of them and factoring them into your savings strategy upfront can help you avoid costly surprises later.

Building your first-home savings strategy with EarnIn

Saving for your first home doesn’t have to feel impossible, especially when you break it into repeatable steps. EarnIn offers tools that help you save, plan, and stay flexible along the way.

Tip Yourself², for example, lets you automatically save a portion of your paycheck in an FDIC-insured account with no interest and no monthly fees. You can use it to build your down payment over time, set savings goals, and track your progress without opening a separate savings account.

You can also use EarnIn’s financial calculators¹ to estimate how much home you may be able to afford based on your income, debt, and timeline. These calculators help you compare different price points, down payment amounts, and savings strategies.

During the home-buying process, you may run into unexpected costs, like appraisal fees, additional inspections, or last-minute moving expenses. Cash Out³ can help you access up to $150/day, with a max of $1,000 between paydays from your already earned wages with no mandatory fees. Tips are optional⁴. If you need your money faster, Lightning Speed⁵ lets you get funds in minutes for a fee. Lightning Speed⁵ availability depends on your bank and other factors. Remember that accessing wages early means less money on actual payday.

Here's a look at how much you might need to save over time to cover certain costs associated with buying your first home.

Goal	Timeline	Strategy
$10,000 down payment	~18 months	Auto-save $125/week with Tip Yourself²
$2,000 closing costs	~12 months	Save $85/paycheck (with bi-weekly pay)
Emergency cushion	Ongoing	Save small amounts weekly

EarnIn Feature	Use Case	Cost
Tip Yourself²	Saving for down payment or closing costs	No monthly fees; no interest
Cash Out³	Unexpected costs during process	No mandatory fees; tips optional
Lightning Speed⁵	Fast access	Fee applies

Practical steps to determine your budget

To create a first-home budget that truly fits your life, you’ll want to get a clear idea about your income, expenses, and savings timeline. Start by calculating your true monthly income after taxes and deductions, since that’s what actually supports your mortgage payment. Then list every recurring debt you currently have, including student loans, credit cards, personal loans, and car payments, so you can understand your full financial picture.

Next, use online tools like EarnIn’s financial calculators¹ to estimate your monthly mortgage payment for different home prices. You can plug in taxes, interest rates, and HOA fees to get a more accurate view.

Getting pre-qualified for a mortgage can also help you understand your potential interest rate range, but remember, pre-qualification doesn’t guarantee final approval, and rates may change before you lock in a loan.

A simple month-by-month plan if you're a year or more away from buying a home might look like this:

Month 1: Review income, debts, and expenses; run affordability calculations
Month 2: Set down payment and closing cost goals; automate savings
Months 3–6: Reduce high-interest debt to lower your DTI
Months 7–12: Build an emergency fund and refine your target price range
Month 12+: Begin pre-qualification and compare lenders

To make the process easier, create a simple spreadsheet that includes your income, debts, estimated mortgage, and savings targets. Then, check it regularly to keep yourself on track.

Common mistakes first-time buyers make

When you're excited about buying your first home, it’s easy to make hasty decisions that may lead to financial stress later.

One common mistake first-time buyers make is maxing out their pre-approval amount, which could result in a mortgage payment that feels too tight once you factor in daily life expenses. Another mistake is forgetting about ongoing maintenance costs, which can average 1–3% of your home’s value each year.

Some buyers drain their entire savings on the down payment and closing costs, leaving no emergency cushion, which may lead to financial strain when surprise repairs pop up.

Rushing the process is another pitfall. Instead, taking time to compare lenders and run realistic numbers could help you avoid long-term challenges.

Warning signs to watch for:

Your mortgage payment would leave no room for savings
You’d have less than one month of expenses left after closing
You’re relying on perfect financial conditions
You’re assuming you’ll earn more in the near future

Once you understand the pitfalls, you’re ready to take clear action steps.

Taking action on your first-home journey

Now that you know how to build a realistic first-home budget, you can take action based on your actual numbers. Start by using EarnIn’s financial calculators¹ to compare different price points and estimate monthly payments. Then consider using Tip Yourself² to begin consistently saving for your down payment and closing costs. Automating your savings can help you make progress without having to think about it every week.

If unexpected expenses come up, like fees during the home-buying process, you can use Cash Out³ to access up to $150/day, with a max of $1,000 between paydays of your earned pay with no mandatory fees (tips are optional⁴). Just remember that accessing wages early means less money on your actual payday. Sign up and see how EarnIn can support your dream of becoming a homeowner.

When you build your plan around your real financial situation, buying your first home can feel much more achievable.

FAQs

How much house can I afford on a $50K salary?

On a $50K salary, you may want to explore properties listed at 2.5–3x your income, but it depends on your debts, how much you'll put for a down payment, and your unique financial situation.

Should I put 20% down on my first home?

Putting 20% down on your first home may help you avoid paying for private mortgage insurance (PMI), but many buyers start with a down payment closer to 3–5%.

What's the 28/36 rule?

The 28/36 rule states that housing costs should remain under 28% of your gross income, while your total monthly debt payments are under 36%.

How long does it take to save for a down payment?

The amount of time it takes to save for a down payment varies based on how much you want to put down, your income, and your savings rate. A larger down payment amount may take several years to save up.

Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.

This Blog was sponsored by EarnIn. While the author received compensation, the information shared is grounded in independent research and intended to provide helpful and accurate guidance to readers.

EarnIn is a financial technology company not a bank. Banking Services are provided by Evolve Bank & Trust or Lead Bank, both Member FDIC. The FDIC provides deposit insurance to protect your money in the event of a bank failure. More details about deposit insurance here.

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The calculations provided are based on estimates and should be used for informational purposes only. Please be aware that comparisons may not be 100% accurate. The insights and data presented do not constitute financial advice, and we recommend consulting with a qualified financial advisor for personalized guidance.

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Tip Yourself Account funds and Tip Jars are held with Evolve Bank & Trust, Member FDIC and FDIC insured up to $250,000. Tip Yourself is a 0% Annual Percentage Yield and $0 monthly fee service deposit account. For more information/details visit Evolve Bank & Trust Customer Account Terms.The FDIC provides deposit insurance to protect your money in the event of a bank failure. More details about deposit insurance here.

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EarnIn determines your daily and pay period limits (“Daily Max” and “Pay Period Max”) based on your income and financial risk factors as outlined in the Cash Out User Agreement. EarnIn reserves the right to adjust the Daily Max and Pay Period Max at its discretion. Your actual Daily Max will be displayed in your EarnIn account before each Cash Out. For additional information about your Daily Max and Pay Period Max, please refer to our FAQ. Service may not be available in all states.

EarnIn does not charge interest on Cash Outs or mandatory fees for standard transfers, which usually take 1–2 business days. For faster transfers, you can choose the Lightning Speed option and pay a fee to receive funds within 30 minutes. Lightning Speed may not be available at all times and/or to all customers. See the Fee Table for details. Tips are optional and do not affect the quality or availability of services.

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Tips go to EarnIn and help us provide tools such as Credit Monitoring for free and keep Lightning Speed fees low. Your service quality and availability aren't affected by whether you tip or not.

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Lightning Speed is an optional service that allows you to expedite the transfer of funds for a fee. Depending on the product, the fee may be charged by EarnIn or its banking partner. Lightning Speed may not be available to all customers. Actual transfer speeds depend on your bank. See the Lightning Speed Fee Table for details.