Securing a mortgage may seem like an unattainable goal for individuals making $20,000 to $30,000 a year; however, the difficulty isn't necessarily true. While your income does play a role in a lender's decision-making process, there are many other factors that a lender considers before a mortgage is granted. To help you better understand how much mortgage you can potentially borrow with an income of $20,000 a year or $30,000 a year, the guide below explains the type of financial information that a lender looks at when evaluating your loan application.

How Much Mortgage Can I Get If I Earn $30,000 a Year?

When a lender looks at your yearly salary, it is confirming that your monthly mortgage and related housing expenses will not exceed more than 28% of your gross monthly income. While this percentage is essential in determining how much mortgage you can get while earning $30,000, it isn't the only factor that a home loan lender looks at. However, keeping the 28% in mind as you peruse home buying websites can help you set a realistic budget for yourself before you seek preapproval from a mortgage lender. If you were to use the 28% rule, you could afford a monthly mortgage payment of $700 a month on a yearly income of $30,000.

Another guideline to follow is your home should cost no more than 2.5 to 3 times your yearly salary, which means if you make $30,000 a year, your maximum budget should be $90,000. It's important to remember this is only an estimate, and that when you contact a mortgage lender, it will consider many more financial factors before approving you for a mortgage.

How Much Mortgage Do I Qualify for If I Make $20,000 a Year?

As discussed above, a home loan lender does not want your monthly mortgage to surpass 28% of your monthly income, which means if you make $20,000 a year or $1,676 a month, your monthly mortgage payment should not exceed $469. Once again this is only based on your salary and not on the other financial factors that a mortgage lender will consider before pre-approving you. If you use the 2.5 to 3 times your salary rule, your max budget for a home would be $60,000. Again, these calculations are only based on income which is not all a mortgage lender looks at.

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What Else Do Mortgage Lenders Look at When Approving a Home Loan?

  • Your debt-to-income ratio, which is also known as DTI, is the percentage of your income that goes to debt payments, such as, student loans, credit card payments, and auto loans. A mortgage lender will figure out your DTI by dividing your monthly debt payments by your gross income. Lenders want your debt-to-income ratio to sit at or below 36% of your monthly income. While some lenders may accept a higher percentage, most stick to 36%. Before you apply for a mortgage, it's a good idea to calculate your own DTI ratio, and if you find your percentage is too high you can start making plans to pay down more of your debts before applying for a home loan.
  • Your credit score. While it's no surprise a mortgage lender looks at your credit score, you may not know how your credit score affects a home loan. For starters, your actual score, which can range from 300 to 850, tells a mortgage lender how responsible you are when it comes to paying back borrowed money. A high score indicates that you make payments on time and actively pay down your debts, while a lower score often demonstrates a pattern of late or missed payments. Basically, having a score of 700 or higher gets you a better mortgage rate. Unfortunately, a poor credit score, which is anything below 630, can make it hard for you to get a loan. If you're not happy with your credit score, it's wise to improve it before you start applying for a mortgage.
  • Your down payment is the amount that you pay upfront on your mortgage. This is usually expressed in a percentage. For example, if you were to put 20% down on a home that cost $100,000, you would be paying $20,000 out of pocket. While you don't necessarily need to put 20% down, doing so could potentially help you get a better mortgage rate. The minimum down payment required to get a mortgage depends on the type of loan that you apply for. Your credit score and history can also affect the amount that you are asked to put down.

Should You Get a Mortgage Pre-approval?

If you're serious about buying a home and your finances are in order, getting a home loan pre-approval is an important first step. A loan pre-approval gives you a clear picture of what your mortgage will look like and just how much home you're able to afford. It's recommended you get pre-approved by at least three mortgage lenders. Having multiple options means that you can compare rates and hopefully find the one that will save you the most money in the long run.

What Should You Do If You're Not Happy With The Mortgage You Qualify for?

Depending on where you live, the mortgage that you qualify for while making $20,000 a year or $30,000 a year may not be enough to buy a house. If this is the case, you may want to choose to wait until your yearly income increases. However, if your credit score or debt-to-income ratio is causing you to receive a lower mortgage offer than you anticipated, you may want to put buying a home on hold until you raise your credit score and lower your debt-to-income ratio. Once you've accomplished one or both goals, you can start taking steps to get preapproved.

Qualifying for a mortgage when you make $20,000 a year or $30,000 a year is absolutely possible. While your income plays a role in a mortgage lender's final decision, it isn't the only financial factor a lender looks at. A healthy credit score, a low debt-to-income ratio and a large enough down payment saved up can ensure that you get the highest mortgage achievable for your income bracket. If you're interested in finding out how much mortgage you qualify for, and comparing the rates of the top mortgage providers, please click the button below.

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MONI IS RIGHT! This makes no sense! How am I able to afford $1200 rent but I wouldn't be able to attain $1200 mortgage? Makes no sense!

Miss accel

I suggest everyone that makes $30k find a side hustle maybe doing freelance work, work from home job, or drive for Uber. Use that money with money from your job and save as much as you can. Try to save 50 percent of the cost of the home. Build your credit to you get close to 800. Then take out a personal loan for the rest of the cost. If you can’t get a personal loan continue to save money in a high interest savings account. You will have to sacrifice to save and it’s easier if you have a spouse helping you.


And then we laugh because they won't grant us a loan that is 500 a month but somehow we manage to pay 1200 a month in rent and utilities aren't included. And they wonder why we live in cars hoping we can get a loan when rent's unatainable and the morgage companies go nope, go rent you can't afford 500 so go rent for 1200. Oh and prove 2x the rent income per month, first and last months and a deposit. Its wild, if you can pre qual, you'll never find a house in your price range if you make 30k or less a year. Maybe before the 2008 housing bubble burst you could, but not since then. Regulation is good in general, but stranglehold is not so hot if you don't make the big bucks.

donna williams

great article; thanks for this info


I’m trying my best to get my finances and health in check. This article definitely helped me get some insight. I would like more information like this.