The process of purchasing a house can be a stressful one because it’s a complex and lengthy process. One of the biggest questions that people have when searching for a home is how much house they can afford. There is no legal or official rule and banks will often lend you more than you can afford, so let’s break that down in the following article.
For the purposes of this article, we’re going to focus on whether you can buy a house on $15 an hour wage.
The answer is yes, you can buy a house on $15 an hour. You can buy a house on any salary, as long as you know how much house you can afford to safely afford the monthly payment.
So the question isn’t can you buy a house on $15 an hour, but how much house can you afford on $15 an hour. To know that, we need to know how much money someone will take home each month who’s making $15 an hour.
How much money do I take home on $15 an hour?
Here’s a table of how much money you will take home during each period when you are making $15 an hour. These could change slightly depending on your deductions, benefits (if applicable), and more. However, this will give us a good idea.
| Time | Take-Home Pay |
| Monthly | $2,600 |
| Bi-Weekly | $1,200 |
| Weekly | $600 |
| Daily | $120 |
Now that we know there will be $2,600 in take home pay each month, we can use that to figure out how much house someone making $15 an hour can afford.
What is the max home price I can afford on $15 an hour?
So up to this point, we know that someone making $15 an hour can buy a house. We also know that someone making $15 an hour will take home about $2,600.
But just before we get to the amount, there’s an important distinction between what you can afford and what a bank will lend you.
Just because a bank will lend you money doesn’t mean you can safely afford the monthly payments. There’s a good rule that everyone should follow when it comes to rent and/or mortgages. And if you’re wondering, you can pay your rent with a Visa gift card.
Your rent or mortgage payment should never be more than 30% of your take home pay. And we know the take home pay will be about $2,600, give or take depending on your specific situation and job. If you keep this rule in mind, you should always be safe and be able to afford your home payment.
So let’s use the 30% rule for a $15 an hour wage.
$2,600 * 30% = $780
30% of $2,600 is $780 per month. That is a very safe amount of what you can afford as your monthly mortgage payment.
To calculate, how much home you can afford with a $780 monthly payment, there are mortgage calculators out there that will do the heavy lifting. Here are a few:
You can also just google “mortgage calculator” to pull up a calculator right in the search results. And you’ll want to play around with the numbers for a monthly payment and include taxes and fees as well.
As a result, someone making $15 an hour can afford approximately a $120,000 house with a $20,000 initial down payment and a 30% year loan with an interest rate of 5.8%.
There’s a lot of new terms in there and it can certainly change depending on your specific situation. But at least now you have a ballpark idea of how much house you can afford on $15 an hour.
And remember that if you forgo the down payment of $20,000, your monthly payment will go up. $20,000 is a lot for anyone, but you should always keep a savings account for large purchases and a rainy day fund. Keep that in mind when using a mortgage calculator. Or vice versa, you can put more down to make the monthly payment go down and ultimately you can afford more house.
There are a lot of factors and calculations that go into a mortgage payment, so be sure to talk to a professional to understand all of your options.
Conclusion
Hopefully this article was useful in helping you understand on whether or not you can buy a house on $15 an hour. And more specifically how much house you can buy on that income.
As long as you have an income, you can afford a house. The tricky part is understanding how much you can afford. Everyone’s situation is different and it’s hard to get an exact amount from any article or mortgage calculator on the Internet.
But one thing you should always do is adhere to the 30% rule to maintain financial stability. You you should never spend more than 30% of your take home pay on your mortgage or rent. If you keep that in mind, you can easily calculate what your monthly mortgage payment should be. And from there you can work backwards to understand how much house you can afford.
The article above is purely informational and should not be used for any legally binding decisions. Talk to a real estate or financial professional before making any real estate purchases.
