While it’s still possible to request mortgage forbearance via the CARES Act if you’re having trouble making monthly payments, this option will eventually come to an end.
In fact, you might only have about two months left to contact your loan servicer for relief. So if you think you’ll need help, act sooner rather than later to avoid missing out.
This cutoff date depends on the type of mortgage you have, e.g. an FHA loan or a conventional loan.
What’s the Last Day to Apply for Mortgage Forbearance?
Fannie and Freddie loans – when the “national emergency” ends
FHA loans – June 30th, 2021
USDA loans – June 30th, 2021
VA loans – June 30th, 2021
Oddly, it’s not even known when that date is, at least when it comes to mortgages backed by Fannie Mae and Freddie Mac.
That’s because the GSEs currently have the end date for relief set to the end of the national emergency. So it might be a moving target given COVID-19 seems to just be getting started.
Seeing that the other agencies have extended into the first six months of 2021, the hope is Fannie/Freddie will also do at least that.
The FHA had set a deadline of October 30th, 2020 (which was extended to December 31st , 2020, then Feb. 28th, 2021, then to March 31st, 2021, and now to June 30th).
Similarly, the USDA had announced a deadline of December 31st, 2020 for approving forbearance requests, then aligned it with the FHA’s February 28th, 2021 cutoff date, and has since extended it until June 30th, 2021.
With regard to VA loans, it’s the same story as the FHA as government-backed home loans appear to have the same cutoff dates (other than USDA).
Whether these end dates all get extended in light of the continued uncertainty and ongoing economic disruption remains to be seen.
They’ve already been extended several times, so it won’t be a surprise if they move them into the future again, especially with COVID continuing to keep the economy shuttered.
Loan Servicers Will Have Their Busiest Season Ever
I spoke to Sapan Bafna, senior leader, Advanced Delivery Engines for CoreLogic, who is responsible for developing IntelliMods, a web-based loan modification decisioning tool, to get his take on how things might go once the CARES Act forbearance option runs out.
In short, he believes loan servicers will experience “their busiest season ever” as they process post-forbearance requests for millions of homeowners.
He developed IntelliMods as a result of the 2008 economic crisis and believes the industry will be held accountable for underusing technology and available data.
In other words, they could make a complete mess out of things once borrowers exit their CARES Act forbearance plans.
And that won’t be good for the industry, which only recently got past the many loan modification and foreclosure snafus from the Great Recession.
Still, things don’t seem nearly as bad this time around, at least for most homeowners.
[How Is Mortgage Forbearance Paid Back?]
What Will Be the Most Common Outcome Post-Forbearance?
Fannie and Freddie loans will likely go the payment deferral route
FHA loans will use the COVID-19 Stand Alone Partial claim option
USDA and VA loans will have full suite of existing home retention options on the table
When asked what would be the most common outcome after forbearance ends, Bafna broke it down by loan type.
He believes borrowers with Fannie- and Freddie-backed mortgages will take advantage of the payment deferral option, followed by a loan modification if they’re unable to resume making their regular mortgage payments.
For FHA loans, he expects most to go with the COVID-19 Stand Alone Partial claim option, followed by four new modification options that have been specifically created for the COVID-19 pandemic.
For USDA loans and VA loans, he believes “homeowners will be offered the full suite of existing home retention options.”
If all else fails, it is possible that some homeowners will have to go the deed-in-lieu of foreclosure route, or simply be foreclosed on.
The good news for the overall market is because of severe inventory shortages, additional foreclosed properties likely won’t put much if any downward pressure on home prices.
Of course, he did say “Some local markets have been hit particularly hard by the pandemic recession and will experience elevated unemployment and home-price weakness in 2021.”
At the same time, more resilient metros will rebound and actually see additional home price appreciation next year.
With regard to short sales, which were big after the most recent housing crisis, Bafna believes they’ll be “a small component since we currently see only around 3% of mortgages with negative equity.”
The House Rich, Cash Poor Conundrum
While it sounds like most homeowners will see relatively positive outcomes post-forbearance, he highlighted another issue regarding the many borrowers nationwide who are now house rich and cash poor.
Because property values have increased significantly over the past several years, but incomes have lagged, some homeowners may have difficulty refinancing their mortgages or otherwise accessing their home equity.
As such, a borrower experiencing financial distress because of the pandemic-related recession will be at the greatest risk of losing their home.
And while they might be able to sell via traditional channels due to their amassed equity, they’ll still incur moving costs, lose any homeowner-related tax benefits, and “forego the opportunity to build equity in their homes as prices rise in the future.”
This exemplifies the problem with real estate, which is an illiquid asset. Often there’s a lot of money trapped inside that can’t be easily accessed.
There are some options out there, like reverse mortgages and innovate products like Noah’s home equity sharing program, but no one solution is totally ideal.
The good news, even if hard to access, is homeowners have lots of equity this time around, which is a big improvement from a decade ago when their mortgage balances grossly outweighed their property values.
That should allow the real estate market to absorb the negative impact of the COVID-19 pandemic, even if it goes on for another year or longer.
Read more: There Will Be a 3-Month Waiting Period to Get a Mortgage After Forbearance
The home-buying process can seem daunting for first-time homebuyers. The good news is there are some mortgage lenders that offer home loan products designed to provide more ease with the process, which can be very appealing to many first-time future homeowners.
To help you get started, CNBC Select rounded up a list of the best mortgage lenders first-time homebuyers should consider. We evaluated home loan lenders based on the types of loans offered, customer support, credit score requirements and minimum down payment amount, among others (see our methodology below.)
Beyond just the lowest rates, it’s important to go with the lender that offers the best loan terms to suit your needs. There’s a learning curve when it comes to homeownership, but we’ve included an FAQs section below to help you get a better understanding of some aspects of the process.
The best mortgage lenders for first-time homebuyers
Best for loan variety
PNC Bank
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, HELOCs, Community Loan and Medical Professional Loan
Terms
10 – 30 years
Credit needed
Minimum down payment
0% if moving forward with a USDA loan
Pros
Offers a wide variety of loans to suit an array of customer needs
Available in all 50 states
Online and in-person service available
Cons
Doesn’t offer home renovation loans
Who’s this for? PNC Bank has a wide variety of home loan options, making it easy for first-time homebuyers to find a loan that suits their circumstances. This lender offers conventional loans, FHA loans, VA loans, jumbo loans and HELOCs. On top of that, PNC Bank offers USDA loans, which can be tougher to find among some lenders. PNC Bank also has some specialized loan options, like the Community Loan, which is meant for individuals with lower cash reserves and allows for a down payment as low as 3% and no PMI (private mortgage insurance).
It also offers a Medical Professional Loan for interns, residents, fellows or doctors who have completed their residency in the last five years. Eligible borrowers for this loan can borrow up to $1 million and won’t have to pay PMI, regardless of their down payment amount.
In addition to all these offerings, PNC Bank gives eligible borrowers the chance to qualify for a $5,000 grant to be used toward closing costs. Eligible borrowers must have an income at or below 80% of the median household income for the metropolitan statistical area (MSA), or their desired property must be located in a low- or moderate-income census tract as designated by the FFIEC, according to PNC’s website.
Best for educational offerings
Bank of America Mortgage
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, FHA loans, VA loans, jumbo loans, doctor loans and the Affordable Loan Solution mortgage
Terms
15 – 30 years
Credit needed
Not disclosed
Minimum down payment
0% if moving forward with a VA loan; 3% if moving forward with the Affordable Loan Solution mortgage
Pros
Offers a wide variety of loans to suit an array of customer needs
Offers an Edu-Series for educating first-time homebuyers as well as other learning resources and materials
Online and in-person service available
Fixed-rate and adjustable-rate mortgages offered
Reduced cost of mortgage insurance
Cons
Doesn’t offer USDA loans
Who’s this for? Bank of America stands out for its first-time homebuyer educational resources. Aside from home loan calculators, which are typical for mortgage lenders to provide on their websites, Bank of America has an online “Edu-Series” for first-time home buyers. There are also guides on its website that break down key terms and a list of FAQs geared toward first-time home buyers.
Bank of America also offers a variety of loan options, including a home loan for medical professionals. With this loan, doctors, dentists, residents and fellows can make down payment minimums that are tiered based on the size of the loan they’re applying for. They’ll put down at least 3% on mortgages up to $850,000, at least 5% on mortgages up to $1 million, at least 10% down on mortgages up to $1.5 million and at least 15% down on mortgages to $2 million. If you’re a medical professional, Bank of America will also exclude your student loan debt from your total debt when you’re applying for the loan. This could bring down your debt-to-income ratio for the purposes of applying for the loan and make it easier for you to qualify.
Even if you aren’t a qualifying medical professional, you can still potentially take advantage of tiered down payment terms through the Affordable Loan Solution mortgage option. With this loan, eligible borrowers can make a down payment as low as 3% on loan amounts up to $726,200, and as low as 5% on mortgages up to $1,089,300. Mortgage insurance would be required if making down payments lower than 20%, but according to Bank of America’s website, the mortgage insurance would come at a reduced cost compared to that of other conventional loans.
Best for lower credit scores
Rocket Mortgage
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, FHA loans, VA loans and Jumbo loans
Terms
8 – 29 years, including 15-year and 30-year terms
Credit needed
Typically requires a 620 credit score but will consider applicants with a 580 credit score as long as other eligibility criteria are met
Minimum down payment
3.5% if moving forward with an FHA loan
Pros
Can use the loan to buy or refinance a single-family home, second home or investment property, or condo
Can get pre-qualified in minutes
Rocket Mortgage app for easy access to your account
Cons
Runs a hard inquiry in order to provide a personalized interest rate, which means your credit score may take a small hit
Doesn’t offer USDA loans, HELOCs, construction loans, or mortgages for mobile homes
Doesn’t manage accounts for jumbo loans after closing
Who’s this for? First-time homebuyers tend to be younger and may not have a long credit history, which can make it harder to qualify for a good mortgage rate. Rocket Mortgage stands here because it accepts applicants with credit scores as low as 580. The lender also has a program called the Fresh Start program that’s aimed at helping potential applicants boost their credit score before applying.
Rocket Mortgage offers conventional loans, FHA loans, VA loans and jumbo loans but not USDA loans, which means this lender may not be the most appealing for potential homebuyers who want to make a purchase with a 0% down payment. Rocket Mortgage doesn’t offer construction loans (if you want to build a brand new custom home) or HELOCs, but if you’re a homebuyer who only plans to purchase a single-family home, a second home, or a condo that’s already on the market, this shouldn’t be a drawback for you.
This lender offers flexible loan repayment terms that range from 8 – 29 years in addition to standard 15-year and 30-year terms.
Best for no lender fees
Ally Bank Mortgage
Annual Percentage Rate (APR)
Apply online for personalized rates; fixed-rate and adjustable-rate mortgages included
Types of loans
Conventional loans, HomeReady loan and Jumbo loans
Terms
15 – 30 years
Credit needed
Minimum down payment
3% if moving forward with a HomeReady loan
Pros
Ally HomeReady loan allows for a slightly smaller downpayment at 3%
Pre-approval in just three minutes
Available in all 50 U.S. states
Online support available
Doesn’t charge lender fees
Cons
Doesn’t offer FHA loans, USDA loans, VA loans or HELOCs
Who’s this for? Ally Bank doesn’t charge any application fee, origination fee, processing fee or underwriting fees. These are what’s collectively known as “lender fees” and they can cost you anywhere from a few hundred to a few thousand dollars, and eat into the money you put aside for buying your home. When you’re a first-time home buyer, going through the process as affordably as possible is often top-of-mind, so saving on these fees will let you keep more of your money for other things, like renovations or moving costs.
Keep in mind, though, that Ally Bank may still charge appraisal fees and recording fees and may charge for the title search and insurance. As long as you have all the necessary documents handy and submit complete and accurate information, you can get pre-approved for a loan in as little as three minutes online and submit your application in just 15 minutes.
Best for no PMI
CitiMortgage®
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, FHA loans, VA loans and Jumbo loans
Terms
15 – 30 years
Credit needed
Minimum down payment
Terms apply.
Pros
Citi’s HomeRun Mortgage program allows for a downpayment as low as 3%
Citi’s Lender Assistance program gives eligible homebuyers a credit of up to $5,000 to use toward closing costs
Ability to choose between fixed-rate and adjustable-rate mortgages
New and existing Citi bank customers can qualify for closing cost discounts based on their account balance
HomeRun mortgage program allows for a downpayment of less than 20% without PMI
Provides homeownership education and counseling
Cons
No options for a 0% downpayment
Existing customers need high account balances to receive some of the highest interest rate discounts
Who’s this for? CitiMortgage gives homebuyers a chance to save big-time by waiving the PMI (private mortgage insurance) requirement on loans with down payments below 20%. This can be done by applying for a mortgage through Citi’s HomeRun program, which also allows for down payments as low as 3%.
PMI is typically a required monthly charge with other home loans if you make a down payment of 20% or less. But PMI can cost you tens of thousands of dollars extra over the entire life of the loan. The money you save from not paying PMI could potentially go towards saving for a second property, a home renovation, or any other financial goal you have. HomeRun mortgages also allow borrowers to lock in a fixed rate on their mortgage so they won’t have to worry about their rate increasing down the line.
FAQs
How do mortgages work?
A mortgage is a type of loan you can use to purchase a home. This agreement essentially says you can purchase a home without paying for it in full, upfront — you’ll just need to put some of the money down — usually between 3% and 20% of the home price — and pay smaller, fixed monthly payments over a certain number of years, plus interest and potentially other charges. Having a mortgage allows you to own the property even if you don’t have the hundreds of thousands of dollars in cash needed to purchase it outright.
What is a conventional loan?
A conventional loan is a home loan that’s funded by private lenders and sold to government enterprises such as Fannie Mae and Freddie Mac. It’s a very common loan type and some lenders may require a down payment as low as 3% or 5%.
What is an FHA loan?
A Federal Housing Administration loan, or FHA loan, is a loan program that has some slightly looser requirements. For example, this loan program may allow some borrowers to be approved for a loan with a lower credit score or be able to get away with having a higher debt-to-income ratio. You’ll typically only need to make a 3.5% down payment with this type of loan.
What is a USDA loan?
A USDA loan is offered through the United States Department of Agriculture and is aimed at borrowers who want to purchase a home in a qualifying rural area. USDA loans don’t require a minimum down payment, so borrowers can use this loan to purchase a home for almost no money upfront (you’ll still likely pay fees, though).
What is a VA loan?
VA mortgage loans are provided through the U.S. Department of Veterans Affairs and are meant for service members, veterans and their spouses. They typically require a 0% down payment and borrowers don’t have to pay private mortgage insurance.
What is a jumbo loan?
A jumbo loan is meant for home buyers who need to borrow more than $647,200 to purchase a home. Jumbo loans usually have stricter credit score and debt-to-income ratio requirements, and they also typically require a larger minimum down payment.
How is my mortgage rate decided?
Mortgage rates change almost daily and can depend on market forces such as inflation and the overall economy. However, your specific mortgage rate will depend on your location, credit report and credit score. The higher your credit score, the more likely you are to be qualified for a lower mortgage interest rate.
Be sure to submit the necessary information for more personalized rate estimates from your desired lender.
What is the difference between a 15- and 30-year term?
A 15-year mortgage gives homeowners 15 years to pay it off in fixed, equal amounts plus interest, while a 30-year mortgage gives homeowners 30 years to pay it off. Monthly payments are generally lower with a 30-year mortgage since you’ll have a longer period of time to pay off the loan. However, you’ll wind up paying more in interest over the life of the loan since it is charged on a monthly basis. A 15-year mortgage, on the other hand, lets you save on interest but you’ll likely have to make a higher monthly payment.
How does private mortgage insurance (PMI) work?
Lenders charge private mortgage insurance (PMI) to protect themselves in the event that a borrower defaults on their loan. PMI is assessed to your account if you choose to make a down payment of less than 20%. You’ll be responsible for paying this in addition to your monthly mortgage payments.
However, you can usually have the PMI waived after you’ve made enough payments to build 20% equity in your home.
Bottom line
If you need to take out a mortgage to purchase your first home, you have options. Certain mortgage lenders stand out for first-time homebuyers by considering applicants with lower credit scores, offering lower down payments and providing useful educational resources.
Keep in mind that mortgage interest rates fluctuate often and the rate you receive will vary depending on your location, credit score and credit report. While lenders may post general interest rate ranges on their websites, the best way to get a more accurate estimate of your rate is to provide the necessary information to check your rate.
Our methodology
To determine which mortgage lenders are the best for first-time homebuyers, CNBC Select analyzed dozens of U.S. mortgages offered by both online and brick-and-mortar banks, including large credit unions, that come with fixed-rate APRs and flexible loan amounts and terms to suit an array of financing needs.
When narrowing down and ranking the best mortgages, we focused on the following features:
Fixed-rate APR: Variable rates can go up and down over the lifetime of your loan. With a fixed rate APR, you lock in an interest rate for the duration of the loan’s term, which means your monthly payment won’t vary, making your budget easier to plan.
Types of loans offered: The most common kinds of mortgage loans include conventional loans, FHA loans and VA loans. In addition to these loans, lenders may also offer USDA loans and jumbo loans. Having more options available means the lender is able to cater to a wider range of applicant needs. We have also considered loans that would suit the needs of borrowers who plan to purchase their second home or a rental property.
Closing timeline: The lenders on our list are able to offer closing timelines that vary from as promptly as two weeks after the home purchase agreement has been signed to as many as 45 days after the agreement has been signed. Specific closing timelines have been noted for each lender.
Fees: Common fees associated with mortgage applications include origination fees, application fees, underwriting fees, processing fees and administrative fees. We evaluate these fees in addition to other features when determining the overall offer from each lender. Though some lenders on this list do not charge these fees, we have noted any instances in which a particular lender does.
Flexible minimum and maximum loan amounts/terms: Each mortgage lender provides a variety of financing options that you can customize based on your monthly budget and how long you need to pay back your loan.
No early payoff penalties: The mortgage lenders on our list do not charge borrowers for paying off the loan early.
Streamlined application process: We considered whether lenders offered a convenient, fast online application process and/or an in-person procedure at local branches.
Customer support: Every mortgage lender on our list provides customer service via telephone, email or secure online messaging. We also opted for lenders with an online resource hub or advice center to help you educate yourself about the personal loan process and your finances.
Minimum down payment: Although minimum down payment amounts depend on the type of loan a borrower applies for, we noted lenders that offer additional specialty loans that come with a lower minimum down payment amount.
After reviewing the above features, we sorted our recommendations by best for loan variety, educational offerings, lower redit scores, no lender fees and no PMI.
Note that the rates and fee structures advertised for mortgages are subject to fluctuate in accordance with the Fed rate. However, once you accept your mortgage agreement, a fixed-rate APR will guarantee the interest rate and monthly payment remain consistent throughout the entire term of the loan, unless you choose to refinance your mortgage at a later date for a potentially lower APR. Your APR, monthly payment and loan amount depend on your credit history, creditworthiness, debt-to-income ratio and the desired loan term. To take out a mortgage, lenders will conduct a hard credit inquiry and request a full application, which could require proof of income, identity verification, proof of address and more.
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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
Inside: This guide will teach you about the different factors you need to consider when purchasing a home with a 70k salary.
There are a lot of factors to consider when you’re trying to figure out how much house you can afford. Your income, your debts, your down payment, and the interest rate on your mortgage all play a role in determining how much house you can afford.
Your situation will be different than the person next-door or your co-coworker.
Making 70000 a year is a great salary. You are making the median salary in the United States.
It’s enough to comfortably afford most homes and gives you plenty of room to save money each month.
But how much house can you actually afford?
It depends on several factors, including your down payment, interest rate, income, and credit score.
In this ultimate guide, we’ll walk you through everything you need to know about how much house you can afford making 70000 a year.
how much house can i afford on 70k
In general, you can expect to spend 28-36% of your income on housing.
Generally speaking, if you make $70,000 a year, you can afford a house between $226,000 and $380,000.
How much mortgage on 70k salary?
In general, you should expect to spend no more than 28% of your monthly income on a mortgage payment.
Thus, you can spend approximately$1633-2100 a month on a mortgage.
Just remember this is relative to the interest rate, term length of the loan, down payment, and other factors.
This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.
28/36 Rule
But there’s one factor that trumps all the others: The 28/36 rule.
Also known as the debt-to-income (DTI) ratio.
The 28/36 rule is a guideline that says that your housing costs (mortgage payments, property taxes, homeowners insurance, and HOA fees) should not exceed 28% of your gross monthly income.
And your total debt (housing costs plus any other debts you have, like car payments or credit card bills) should not exceed 36% of your gross monthly income.
You must follow the 28/36 rule.
How to calculate how much mortgage you can afford?
If you’re like most people, you probably don’t know how to calculate how much mortgage you can afford.
This is actually a really important question that you need to ask yourself before beginning the home-buying process.
The answer will help determine the price range of homes you should be looking at. Plus know how much money you’ll need to save for a down payment.
Step #1: Check Interest Rates
Research current mortgage rates to get an accurate estimate. You can also check your credit score and search for average mortgage rates based on your credit score.
Right now, with sky-high inflation, you are unable to afford a bigger house when interest rates are hovering around 6% compared to ultra-low interest rates of 2.5%.
With a 70k salary, this can be the difference between $50-100k on the total mortgage amount you can afford.
Step #2: Use a Mortgage Calculator
Use a mortgage calculator to get an estimate of the home price you can afford based on your income, debt profile, and down payment.
Generally, lenders cap the maximum amount of monthly gross income you can use toward the loan’s principal and interest payment to not more than 28% of your gross monthly income (called the “Front-End” or “Housing Expense” ratio). Then, limit your total allowable debt-to-income ratio (called the “Back-End” ratio) to not more than 36%.
You can use a mortgage calculator to a ballpark range of what house you can afford.
Step #3: Taxes, Insurance, and PMI
When planning for a home purchase, it’s important to factor in all of your monthly expenses, including taxes, insurance, and PMI.
This will ensure that you get an accurate estimate of your home-buying budget based on your household annual income.
Don’t forget to include these payments to get a realistic understanding of your monthly budget.
Step #4: Remember your Living Expenses
When considering how much house you can afford based on your $70,000 salary, you must consider your lifestyle and current expenses.
It is important to factor in other monthly expenses such as cell phone and internet bills, utilities, insurance costs, and other bills.
More than likely, you will be approved for a higher mortgage amount than you would feel comfortable with. This is 100% what lenders will do.
They want to provide you with the most you can afford – not what you should afford.
Step #5: Get prequalified
Prequalifying for a mortgage is an important first step to take when estimating how much house you can afford.
It gives you a more precise figure to work with and helps you make a more informed decision based on your personal situation.
Remember that your final amount will vary depending on a number of factors, especially your interest rate, which will be based on your credit score.
Taking the time to research current mortgage rates helps you secure a better mortgage rate, giving you more buying power.
Home Buying by Down Payment
How much house can you afford?
It’s a common question among home buyers — especially first-time home buyers. Use this table to figure out how much house you can reasonably afford given your salary and other monthly obligations.
The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 4% interest rate.
Annual Income
Downpayment
Monthly Payment
How Much House Can I Afford?
$70,000
$9,552 (3%)
$1,750
$318,412
$70,000
$16,215 (5%)
$1,750
$324,316
$70,000
$34,058 (10%)
$1,750
$340,581
$70,000
$53,573 (15%)
$1,750
$357,152
$70,000
$75,094 (20%)
$1,750
$375,468
$70,000
$98,933 (25%)
$1,750
$395,731
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Mortgage on 70k Salary Based on Monthly Payment and Interest Rate
How much house can you afford on a $70,000 salary?
This largely depends on the current interest rate of the mortgage loan you’re considering. When interest rates are high, people aren’t actively buying as when interest rates are low.
By understanding these factors, you can better gauge how much house you can afford on a $70,000 salary.
The assumption is 30 year fixed mortgage, good credit (690-719), no monthly debt, and a 20% downpayment.
Annual Income
Monthly Payment
Interest Rate
How Much House Can I Afford?
$70,000
$1,750
3.25%
$406,796
$70,000
$1,750
3.5%
$396,231
$70,000
$1,750
3.75%
$386,101
$70,000
$1,750
4%
$375,994
$70,000
$1,750
4.5%
$357,554
$70,000
$1,750
5%
$339,954
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Home Affordability Calculator by Debt-to-Income Ratio
Around here at Money Bliss, we always stress that debt will hold you back.
In the case of buying a house, debt increases your DTI ratio.
Here is a glimpse at what monthly debt can cause your debt-to-income (DTI) ratio to increase. Thus, making the house you want to buy to be more difficult.
Annual Income
Monthly Payment
Monthly Debt
How Much House Can I Afford?
$70,000
$2,100
$0
$440,085
$70,000
$1,900
$200
$404,584
$70,000
$1,800
$300
$382,334
$70,000
$1,600
$500
$337,883
$70,000
$1,350
$750
$282,208
$70,000
$1,100
$1000
$226,582
**Your own interest rate, monthly payment, and how much house you can afford will vary on your personal circumstances.
Increase your Home Buying Budget
Here are a few ways you can increase your home buying budget when buying a house on a $70k annual income.
By following these steps, you can increase your home buying budget and find a more suitable house for your income.
1. Pick a Cheaper Home
Home prices vary significantly in different parts of the country.
Moving out of a major metropolitan area with notoriously high housing costs can help you find more affordable homes.
There are plenty of ways to find a home that is cheaper than you would normally expect.
Look for homes that are for sale in less desirable neighborhoods.
Find homes that are for sale by owner or have not been listed yet.
Check for homes that are for sale outside of your usual price range and haven’t sold as they may drop their price.
Move to a lower cost of living area.
2. Increase Your Down Payment Savings
A larger down payment can reduce the amount you have to finance, which lowers your monthly payment.
Plus help you get a lower interest rate and avoid paying PMI.
Putting down at least 10-20 percent of the home sale price can help boost your home buying power. You can also take advantage of down payment assistance programs in your area.
3. Pay Down Your Existing Debt
Paying down your debts such as credit card debts or auto loans can help raise your maximum home loan.
Paying down your debts can help you qualify for a higher loan amount.
This is because when you have lower amounts of debt, your credit score is higher and your debt-to-income ratio is less. This means you are less likely to be rejected for a home loan.
4. Improve Your Credit Score
A higher credit score can lead to lower rates and more affordable payments.
You can improve your credit score by:
Paying your bills on time
Paying down your credit card balances
Avoiding opening new credit before applying for a mortgage
Disputing any errors on your credit report
This is very true! We had an unfortunate debt that wasn’t ours added to our credit report right before closing. While the debt was an error, it still cost us a higher interest rate and forced us to refinance once the credit report was fixed.
5. Increase Your Income
Asking for a raise, seeking a higher-paid position, or starting a side gig can help you increase the amount of home you can afford.
While you need two years of income from a side gig or your own online business to count as income, the extra cash earned helps you to increase the size of your downpayment. Plus it lowers your debt-to-income ratio with the savings you are setting aside.
What factors should you consider when deciding how much you can afford for a mortgage?
How much house can you afford on your current salary and with your current monthly debts?
This is a question that we are often asked, and it’s one that we love to answer.
We’ll walk you through all the different factors that go into this decision so that you can make an informed choice.
1. Loan amount
The loan amount is a key factor that affects the total cost of a mortgage.
If you have no outstanding debt, a 20% down payment, a high credit score, and a 3.5% interest rate from an FHA loan, you could be able to afford up to $508,000.
However, if you have debt, a smaller down payment, or a lower credit score, the loan amount you can qualify for will be lower.
Similarly, if you choose a 15-year fixed-rate loan, your monthly payments will be higher, but you will end up paying less in interest over the life of the loan than with a 30-year fixed-rate loan.
Ultimately, your loan amount will affect the total cost of your mortgage, so it’s important to consider all the factors when making your decision.
2. Mortgage Interest rate
Mortgage interest rates can have a significant impact on the cost of a mortgage. The higher the interest rate, the more expensive the loan will be.
For example, a difference between a 3% and 4% interest rate on a $300,000 mortgage is more than $150 on the monthly payment.
Remember, in the first few years of a mortgage, the majority of the payment goes toward interest rather than trying to reduce the principal amount.
3. Type of Mortgage
The primary difference between a fixed and variable mortgage is the interest rate and the amount of your payment
Fixed-rate mortgages offer the stability of having the same interest rate for the life of the loan.
Adjustable-rate mortgages (ARMs) come with lower interest rates to start, but those rates can change over the life of the loan. ARMs are often a riskier choice, as if the economy falters, the interest rate can go up.
Fixed-rate loans are typically the most popular choice, as the monthly payment amount is more predictable and easier to budget for. The terms of a fixed-rate loan can range from 10 to 30 years, depending on the lender.
Adjustable-rate mortgages (ARMs) have interest rates that can increase or decrease annually based on an index plus a margin. ARMs are typically more attractive to borrowers who plan on staying in the home for a shorter period of time, as the lower initial interest rate can make the payments more manageable.
The Money Bliss recommendation is to choose a 15-year fixed-rate mortgage.
4. Property value
Property value can have a direct effect on how much you can afford for a mortgage.
As the value of the property increases, so does the amount of money you will need to borrow to purchase it. This, in turn, affects the monthly payments and the amount of interest you will pay over the life of the loan.
This is especially important as many people have been priced out of the market with the rising home prices.
Additionally, higher property values can mean higher taxes, which will add to the amount you need to budget for your mortgage payments.
5. Homeowner insurance
Homeowner’s insurance is a requirement when securing a loan and it can vary depending on the value and location of the home.
Additionally, certain areas that are prone to natural disasters or are located in densely populated areas may have higher premiums than other locations and may require additional insurance like flood insurance.
As a result, lenders typically require that you purchase homeowners insurance in order to secure a loan, and may have specific requirements for the type or amount of coverage that you need to purchase.
Before committing to a mortgage, it is important to consider the cost of homeowner’s insurance and make sure it fits into your budget.
This is something you do not want to skimp on as the cost to replace a home is very expensive.
6. Property taxes
Property taxes are calculated based on the value of a home and the tax rate of the city or county where the property resides.
The higher the property taxes, the more you will have to pay in your monthly mortgage payment.
In states with high property taxes, the property tax bill can be a large sum of the mortgage payment.
It is important to consider these costs when comparing different homes and locations to ensure you can afford the home without stretching your budget too thin.
7. Home repairs and maintenance
It’s important to also consider other factors such as the age of the house, since some properties may require renovation and repairs that can cost more than the house price itself.
Beyond the cost of purchasing a home, homeowners will likely have other expenses related to owning and maintaining the property.
Also, many homeowners prefer to do significant upgrades to the home before moving in, which comes at an additional expense.
These can include ordinary expenses such as painting, taking care of a lawn, fixing appliances, and cleaning living spaces, which can add up.
Additionally, it’s advisable to buy a home that falls in the middle of your price range to ensure you have some extra money for unexpected costs, such as repairs and maintenance.
8. HOA or Homeowners Association Maintenance
This is often an overlooked factor by many new homebuyers, but extremely important as some HOAs add $500-800 per month to the total housing budget.
The purpose of a homeowners association (HOA) is to establish a set of rules and regulations for residents to follow as well as maintain the community or building.
These fees are typically used to pay for maintenance, amenities, landscaping, and concierge services.
HOA fees are used to finance community upkeep, including landscaping and joint space development, and can range from $100 to over $1,000 per month, depending on the amenities in the association.
9. Utility bills
When switching from renting to buying a home, you will have to factor in the costs of your monthly utility bills such as electricity, natural gas, water, garbage and recycling, cable TV, internet, and cell phone when calculating how much mortgage you can afford.
In addition, the larger the home, the higher the costs to heat and cool your new home.
Make sure to ask your realtor for previous utility bills on the property you are interested in.
10. Private Mortgage Insurance
The purpose of private mortgage insurance (PMI) is to protect the lender in the event of foreclosure. It is typically required when a borrower is unable to make a 20% down payment on a home purchase.
PMI allows borrowers to purchase a home with less upfront capital, but also comes with additional monthly costs that are added to the mortgage payment. These fees range from 0.5% to 2.5% of the loan’s value annually and are based on the amount of money put down.
PMI can also be canceled or refinanced once the borrower has achieved 20% equity in the home or when the outstanding loan amount reaches 80% of the home’s purchase price.
11. Moving costs
Moving is expensive, but also a pain to do. So, consider the moving costs associated with relocating from one location to another.
Typically fees for packing, transportation, and possibly storage, and can vary depending on the size of the move and the distance the move needs to cover.
Also, consider if by buying a home, you will stop having moving costs associated with moving from rental to rental.
FAQ
When determining how much house you can afford, it’s important to consider several factors.
These include your income, existing debts, interest rates, credit history, credit score, monthly debt, monthly expenses, utilities, groceries, down payment, loan options (such as FHA or VA loans), and location (which affects the interest rate and property tax). Also, think about the costs of maintaining or renovating a home.
Additionally, you should also evaluate your own budget and assess whether now is the right time to purchase a home. Taking all of these factors into account can help you set the maximum limit on what you can realistically afford.
A mortgage calculator can help you determine your home affordability by providing an estimate of the home price you can afford based on your income, debt profile, and down payment.
It works by inputting your annual income and estimated mortgage rate, which then calculates the maximum amount of money you’re able to spend on a house and the expected monthly payment.
Additionally, different methods are available to factor in your debt-to-income ratio or your proposed housing budget, allowing you to get a more accurate estimate of your home buying budget.
The debt-to-income ratio or DTI is used by lenders to assess a borrower’s ability to make mortgage payments.
This ratio is calculated by taking the total of all of a borrower’s monthly recurring debts (including mortgage payments) and dividing it by the borrower’s monthly pre-tax household income.
A high DTI ratio indicates that the borrower’s debt is high relative to income, and could reduce the amount of loan they are qualified to receive.
Generally, lenders prefer a DTI of 36% or less, which allows borrowers to qualify for better interest rates on their mortgages.
To calculate their DTI, borrowers should include debt such as credit card payments, car loans, student and other loans, along with housing expenses. It is important to note that the DTI does not include other monthly expenses such as groceries, gas, or current rent payments.
Closing costs can have an enormous impact on how much home you’re able to afford.
From application fees and down payments to attorney costs and credit report fees, these costs can add up quickly and affect your overall budget. Unfortunately, most of these closing costs are non-negotiable, but you can ask the seller to pay them.
When buying a house, it is important to research the different mortgage options available to you.
You can typically choose between a conventional loan that is guaranteed by a private lender or banking institution, or a government-backed loan. Depending on your monthly payment and down payment availability, you may be able to select between a 15-year or a 30-year loan.
A conventional loan typically offers better interest rates and payment flexibility.
While a government-backed loan may be more lenient with its credit and down payment requirements.
For veterans or first-time home buyers, there may be special mortgage options available to them.
Ultimately, it is important to talk to a lender to see which loan type is best for your personal circumstances.
When it comes to saving for a down payment, it’s important to understand how much you’ll need and how much it will affect your budget.
Generally, you’ll need 20% of the cost of the home for a conventional mortgage and 25% for an investment property. When you put down more money, it gives you more buying power and may help you negotiate a lower interest rate.
For example, if you’re buying a $300,000 house, you’ll need a down payment of $60,000 for a conventional mortgage. On the other hand, if you put down 10%, you can still afford a $395,557 house. But, you will have to pay for private mortgage insurance.
In addition, there are other ways to help you cover these upfront costs. You can look into down payment assistance programs.
Ultimately, the size of your down payment will depend on your budget and financial goals. You should never deplete your savings account just to make a larger down payment. It’s important to factor in emergency funds and other expenses when deciding on the best option.
Eligibility requirements for loan lenders can vary, but in general, lenders are looking for borrowers with a good credit score, a reliable income, and a history of employment or income stability.
For most loan types, borrowers will need to show a history of two consecutive years of employment in order to qualify. However, lenders may be more flexible if the borrower is just beginning their career or if they are self-employed and do not have W2 forms and official pay stubs.
Income verification also needs to be done “on paper”, meaning that cash tips that do not appear on pay stubs or W2s can not be used as income. The lender will look at the household’s average pre-tax income over a two-year period before determining the amount that can be borrowed.
In order to make sure that the borrower is financially secure, lenders will also pull the borrower’s credit report and base their pre-approval on the credit score and debt-to-income ratio. Employment verification may also be done.
For certain government-backed loan types, such as FHA, VA, and USDA loans, there may be additional or different requirements for eligibility. For instance, for FHA loans, the borrower must intend to use the home as a primary residence and live in it within two months after closing. VA loans are more lenient, and may not require a down payment.
The qualifications for VA loans vary based on the period and amount of time the borrower has served. There are many ways to qualify, whether the borrower is a veteran, active duty service member, reservist, or member of the National Guard. For more information on eligibility requirements for VA loans, borrowers can visit the U.S. Department of Veteran Affairs.
A good credit score will mean you have access to more lending options, better interest rates, and more purchasing power.
On the other hand, a poor credit score could mean you are approved for a loan, but at a higher interest rate and with a smaller house.
This means your budget will be more limited and you may not be able to buy as much home as you had hoped for. Additionally, lenders will also look at other factors, such as your debt-to-income ratio, employment history, and loan term, in order to determine your overall affordability.
What House Can I Afford on 70k a year?
As a borrower, you need to consider the interest rate, down payment, credit score, debt-to-income ratio, employment history, and loan term when determining how much house you can afford.
A higher credit score can often mean a lower interest rate, and a larger down payment can bring down the monthly payments.
All of these factors can have an effect on the amount of money you can borrow and the home you can afford.
Ultimately, understanding the impact of different factors can help borrowers make the best decisions when it comes to getting a mortgage.
Now that you know how much house you can afford, it’s time to start saving for a down payment.
The sooner you start saving, the sooner you’ll be able to move into your dream home. But you may have to wait if you are considering a mansion.
By taking into consideration this guide into account, you can make a more informed decision about the cost of a mortgage for your new home.
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Inside: Are you thinking about moving out? This guide will help you figure out how much money you need to save and where to find affordable housing. Will $5k be enough to move out?
Moving out for the first time is a huge milestone. It’s a chance to start fresh, create your own space, and live on your own terms.
But it can also be a daunting prospect, especially when you’re trying to figure out how much it will cost.
You want to know if $5,000 is enough to move out?
But there are a lot of factors to consider before making the decision to move out, and we’ve laid them all out for you in this ultimate guide.
So whether you’re just starting to think about moving out, or you’re ready to start packing your boxes, read on for everything you need to know about making the big move.
How much money do I need to move out?
Experts recommend having at least $6,000 to $12,000 saved up before moving out.
However, it’s possible to move out with as little as $5,000 if you focus on knowing how to live cheap and have a stable source of income.
However, if you don’t have a job before moving out, the need for a huge savings account is huge.
How much money should I have if I want to move out?
The minimum amount of money required to move out will depend on where you plan to live and your living expenses.
Shortly you will learn factors to include initial moving costs, rental deposit, and ongoing costs like rent, utilities, and food.
If you are looking to move out in an HCOL area, then you will need more than an LCOL city. At this point in your life, it is important to understand HCOL vs LCOL and how it affects your finances.
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What are the expenses you should consider when moving out?
Moving out on your own can be a daunting and expensive task.
There are many expenses to consider when budgeting for your new place especially when you are learning how to move out at 18.
This guide will help you estimate the cost of moving out and provide tips on how to save money.
1. Rent/Utilities
The cost of rent varies depending on the location and size of the apartment or home, with the median rental cost in the US being around $1700 per month.
Along with rent, utilities like electricity, gas, water, and internet can cost around $400 per month.
To save money on rent and utilities, consider finding roommates to split costs or negotiating with landlords for a lower rent.
Rent is your biggest expense when figuring out the ideal household budget percentages.
2. Rent Deposit
When renting an apartment, you will typically need to provide a rent deposit. This deposit is a sum of money paid upfront to the landlord to cover any damages or unpaid rent at the end of the lease.
The cost of a rent deposit can vary depending on the location and the landlord’s requirements, but it can range from $1,000 to $5,000 or one to three months of rent.
To save money on a rent deposit, consider looking for apartments with lower deposit requirements or negotiating with your landlord for a lower amount. A clean rental history will help you with this.
3. Moving Expenses
Moving out can be an expensive process, but with some planning and budgeting, you can keep costs under control.
When considering moving expenses, be sure to factor in the costs of moving truck, packing supplies, such as boxes and tape, as well as the cost of hiring movers
To save money on these expenses, try finding free packing materials on Buy Nothing groups or ask friends and family to help you move. You can also minimize your possessions and have less to move.
4. Renter’s Insurance
When moving out and renting a home or apartment, it’s important to consider getting a renter’s insurance policy to protect you from unforeseen events.
Home insurance, also known as renter’s insurance, is a special type of insurance policy that protects your property against losses or damage stemming from covered perils, including fires, storms, or theft. It can give you peace of mind and help you repair or replace your possessions in the event of unforeseen situations.
Insurance premiums are based on various factors, including where you live, how much you choose to insure, and your deductible. Your credit score and history may also affect your insurance rates.
5. Furniture and Appliances
When moving into a new home, it’s important to consider all the necessary expenses for furnishing the space. This includes appliances like a refrigerator, stove, oven, and microwave, as well as daily living items such as a mattress, table, and couches.
I remember when I moved into my first apartment by myself and there wasn’t a washer or dryer in the apartment. Just hookups. I had one of two choices: 1) rent from the management company for $35 a month or 2) buy new appliances with 0% interest for $35 a month. I choose option #2 and it saved me money in the long term.
To save money, consider buying used furniture from thrift stores or online marketplaces like Facebook Marketplace. You can also find plenty of free furniture if you are not picky.
By being thrifty and smart with your purchases, you can furnish your new home without breaking the bank.
6. Housewares
When moving out on a budget, it’s important to consider the essential housewares you’ll need to make your new place feel like home. Here’s a list of must-haves and their estimated costs:
By prioritizing these essential housewares, you can make your new place feel like home without breaking the bank.
Don’t forget to check out thrift stores and Facebook Marketplace for gently used furniture and household items. With a little creativity and resourcefulness, you can furnish your new home on a budget.
7. Internet and Phone Bills
The average cost of internet and phone plans varies depending on the provider and the plan you choose. However, you can expect to pay around $50 to $100 per month for internet and $40 to $80 per month for a mobile phone plan. In addition, there may be additional fees, such as equipment costs or activation fees, which can add up quickly.
To minimize these expenses, consider bundling services with one provider. Many companies offer discounts for bundling internet, phone, and cable services.
8. Credit Card Payments
If you thinking about moving out and are currently swaddled in debt, then you probably don’t have enough money to move out. If you have high-interest credit card debt, prioritize paying it off before moving out.
Automating savings on essential bills using Truebill can also help you manage your credit card payments while covering the costs of moving out.
Additionally, ensure that you have an emergency fund and enough money to stay a year to handle unexpected expenses.
Things may get harder if you have to pay for college without help from parents.
How to calculate your moving out budget
Moving out on your own requires careful planning and budgeting.
To calculate your moving-out budget, start by determining your monthly expenses once you move out. Make sure to include the factors discussed above.
Then, decide on your target move out date.
Now, figure out how many months you have to save.
For example, if your target move out date is in 6 months and you need to save $5,000 to cover your expenses, you’ll need to save about $833 per month.
Additionally, create an emergency fund to cover unexpected expenses such as medical bills or car repairs. Aim to save at least 3-6 months’ worth of expenses in your emergency fund.
By creating a detailed monthly budget and sticking to it, you can ensure that you can afford to live on your own and achieve your goal of moving out.
Tips and tricks on how to move out
So, you’re finally ready to move out and start your life as an independent adult.
But before you can start your new life, there are a few things you need to take care of first – like, you know, finding a place to live and figuring out how to pay for it.
Learn the lessons from those who did not move out with enough cash – like me.
Tip #1: Create a Budget and Stay Within Limits
Moving out with only $5000 can be challenging, but creating a budget and sticking to it can make the process much easier.
To start, subtract your monthly bills from your monthly income to determine your basic budget.
For instance, if you make $2500 per month and pay $1500 for rent and bills, you have $1000 left for living expenses.
Allocate $400 for groceries and other necessities, $200 for transportation, and $100 for utilities.
This leaves you with $300 for entertainment and other non-essential expenses.
To stay within your budget, consider using a budget binder to track your income and expenses.
Be mindful of living within your means and avoid overspending by resisting the temptation to spend your first paycheck on new household items or entertainment. Instead, opt for more affordable options such as walking around your new neighborhood or having a picnic in the park.
Tip #2: Reduce Expenses Where Possible
One of the hottest topics is becoming frugal green. To save money and the environment at the same time.
When it comes to furniture, try buying used or refurbished items or borrowing from friends and family. Additionally, cutting back on unnecessary expenses such as dining out and entertainment can free up more money.
By being resourceful and creative, it is possible to move out on a budget without sacrificing quality or comfort.
Remember to allocate 50% of your monthly pay towards necessary expenses, 30% towards things you want, and 20% for debt repayment and long-term savings.
Tip #3: Look for Low-Cost Rentals
Finding low-cost rentals can be a challenge, but there are several options available to those who are willing to be flexible and creative.
Renting a basement suite or studio apartment can be a more affordable option.
Consider couch surfing, subletting, or home-sharing arrangements.
Home-sharing can be particularly attractive as it allows you to pair up with an elderly homeowner who needs a little extra help in exchange for low rent.
Find a tiny home rental.
If you don’t mind sharing the space, you can also consider getting a roommate or looking into pod shares. Pod shares are co-living spaces where individuals rent a bed in a shared room, with access to other community spaces like a bathroom and kitchen.
Become a housesitter and be paid to move out. Learn more with Trusted Housesitters.
With a little bit of research and creativity, it is possible to find low-cost rentals that fit your budget and lifestyle. Remember to determine exactly how much you can spend on rent and be open to alternative housing solutions to help keep your costs at a minimum.
Tip #4: Look Into Getting Renters Insurance
When renting you are more than likely going to live closer to others, which means more things can go wrong. Don’t skip out on renter’s insurance, as it can provide the peace of mind and protection you need as a first-time renter.
Without renter’s insurance, unexpected disasters such as fires, storms, or theft can leave you with thousands of dollars in damages that you would have to pay out of pocket.
Renter’s insurance typically costs around $20 per month and can save you a lot of money in the long run. Some affordable options for renter’s insurance include Lemonade, State Farm, and Allstate.
It’s important to shop around and compare policies to find the best one for your needs and budget.
Tip #5: Plan for Emergencies and Unexpected Expenses
It is crucial to plan for emergencies and unexpected expenses.
Start by setting aside a minimum of $1000 for an emergency fund.
Ideally, you should aim to save at least three to six months of living expenses in a rainy day fund. Remember, having a contingency plan and emergency fund can provide peace of mind and protect you from financial hardship.
Tip #6: Start Saving for a Security Deposit
Remember to prioritize saving for a security deposit by setting a specific savings goal and putting aside a portion of your income each month before you move out!
With dedication and discipline, you can reach your goal and move out with confidence.
More than likely, if you are a good tenant, you should get your full security deposit back after your lease is over.
Tip #7: Start a Side Hustle
Starting a side hustle can be a great way to earn extra money while still maintaining your full-time job. You can earn extra income through various side hustles depending on your skills and interests.
The most common side hustles are online jobs, such as transcription, virtual assistance, proofreading, blogging, freelance writing, data entry, graphic design, and web design. These jobs are flexible and eliminate the need for driving anywhere, requiring only a laptop or computer and a good internet connection.
In fact, learning how to make money online for beginners is a trending topic.
As you start your side hustle, put in as much time as you have available to maximize your earnings. Remember that a side hustle is unlikely to replace the need for a real job, but it can provide a great way to earn extra money and pursue your passions.
Tip #8: Plan Ahead and Create a Timeline
When planning to move out on a budget, it’s important to create a realistic timeline.
Start by mapping out all the expenses you’ll need to cover, such as rent, utilities, food, and transportation. Along with how much money you have already saved for unknown expenses.
Stay organized by keeping a checklist of everything you need to do and when it needs to be done. Don’t rush the process – take your time and make sure you have everything in order before making the big move.
Remember the millionaire quote, failing to plan is planning to fail, so take the time to plan ahead and create a realistic timeline.
Is 10000 a good amount to move out with?
According to various sources, $10,000 is generally considered enough to cover moving out expenses and leave room for emergencies.
However, the actual cost of moving out can vary depending on location, rent prices, and cost of living.
Learn how to save 10000 in a year!
FAQ
There are a couple of different ways to save more money including:
Cut back on frivolous expenses like eating out and buying new clothes.
Sell anything you have that you don’t want or need on websites like Craigslist, Facebook Marketplace, Depop, or eBay.
Consider getting an extra part-time job or side hustle to increase your income.
When it comes to furnishings, be thrifty by asking friends and family if they have anything extra they’re getting rid of or checking out second-hand or discount stores.
Set saving goals and track your expenses using a spreadsheet. That will give you a clear picture of what is and is not possible.
Renter’s insurance is highly recommended, and in some cases, required by leases. It provides protection against unforeseen disasters such as fires, storms, or theft that can damage or destroy your possessions.
While it may seem like an unnecessary expense, it is usually affordable and can save you a lot of money compared to paying out of pocket for damages.
Not having renters insurance can leave you vulnerable to unexpected expenses and potential financial ruin.
You should not spend more on your rent payments than you are comfortable.
Just like with getting a mortgage, you should spend no more than 30% of your take-home pay on rent payments.
You don’t want to be stressed about finances, so you should set a realistic budget for rent that allows you to comfortably cover all of your expenses while still having some money left over for savings.
So, is 5000 enough to move out?
It really depends on your situation.
If you’re moving to a cheaper area and don’t have many expenses, you might be able to make it work.
However, if you’re moving to a more expensive city or have a lot of bills, you might need to save up more money.
When determining how much money is needed to move out, there are several factors to consider, which we covered above. These include where you plan to live, your living expenses, initial moving costs, ongoing costs, and emergency funds.
It’s essential to have a budget and do the math to determine the minimum amount required for a smooth transition to independent living on a tight budget.
Ultimately, it’s important to do your research and figure out what’s best for you.
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Save more, spend smarter, and make your money go further
Summer is an extremely popular time to move. Many people avoid moving during the other months due to their kids being in school and not wanting to disrupt the school season. Once school’s out in May or June, then people start their journeys to their new homes and cities. Another reason people often move in the summer is that it’s much more pleasant than trying to move in the cold, rain, snow, or ice! Whether you are moving cross-town or across the country, here are a few tips to save money while moving.
Consider when you’re moving
As we mentioned, most people move during either the late spring, summer, and early fall. And based on the laws of supply and demand, it’s likely to cost more to move then vs. moving in the offseason, all other things remaining equal. If you have kids whose school schedules you don’t want to interrupt, you may not have a choice in what time of year you move.
Even if you’re moving during peak moving season, you might consider saving some money by not moving on the weekend. Again, weekends are when many people move, so many moving companies will charge more for a weekend move. If you have the flexibility to do so, consider moving during the week. If you’re using a professional moving company, ask them if they will give a discount if you move during the week.
Don’t move everything you have
Once you’ve figured out when you’re planning on moving, it’s time to figure out WHAT you’re moving. No matter how much stuff you think you have, you actually have way more. It’s amazing how much you accumulate over the years. Make sure you carefully measure the dimensions of your new home to figure out what will fit. Sell, donate or give away anything that won’t fit in. The earlier that you start the process, the better off you will be.
If you have the flexibility to start moving a few weeks or months before you need to move, you’ll have the time to be able to sell things you don’t want to take with you. If you’re not able to have a garage or yard sale yourself, you might have a friend or family member that is having one. See if they will let you sell some of your items at their sale either on a commission or for a fixed price. If you put it off until the last minute, you’re likely to find yourself giving things away for free or, worse, paying someone to haul it away.
Whether you are moving within your same city or to a new city will have an impact on how much you need to get rid of. When you move long-distance, you’re limited to whatever gets shipped or put on the truck. For shorter moves, you can make multiple trips. Whether you’re moving to a smaller or larger place plays a big part as well. In any case, it’s a good idea to try and downsize as much as possible.
Saving money on packing supplies
There are a few ways that you can save money on packing supplies like boxes. The best way to save money is to get boxes from someone who moved a week or two before you did. They’ll likely be happy for someone to take their boxes away. Unless you know someone that’s recently moved, there aren’t a lot of places to reliably get free moving boxes. One option can be Uhaul — while their boxes aren’t free, they will buy back any boxes that you don’t use. That way you don’t have to worry about overpaying for boxes.
Pack it (or move it) yourself
Another great way to save money while moving is to move things yourself. Now is a great time to call in those favors to get help from your friends, family and church. Of course, the feasibility of moving yourself will depend a lot on your specific situation. Where you’re moving, how much you have to move, and how many people you can call on will be major factors in whether moving things yourself is even possible.
Even if you are hiring a moving company, you can still save money by doing the packing yourself. Most moving companies will pack things for you, but it definitely drives up the cost. Remember that if you do pack things yourself, you may be responsible for any items that are damaged during the move.
The Bottom Line
Moving can be a stressful time, so it depends on your own specific situation how much you want to focus on saving money vs. saving your time. If you can be flexible, try to move during the week and/or during the offseason. The next most important thing to save money while moving is to start early and downsize your possessions as much as possible. The sooner you start, the more time you’ll have to sell the things you can’t take with you. If you can find someone who moved shortly before you, ask if they have any moving boxes you can use, and pack and move as much as you can yourself to save money while moving.
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Dan Miller is a freelance writer and founder of PointsWithACrew.com, a site that helps families to travel for free / cheap. His home base is in Cincinnati, but he tries to travel the world as much as possible with his wife and 6 kids. More from Dan Miller
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