Calculator: How Big a House Can You Buy?

If you're looking to buy a home, you're probably wondering how big a house you can buy. Well, there's a handy mortgage calculator that will let you know just how much you can spend on that dream home of yours, at least right now. Actually, even if you aren't in the market for a house, it's fun to look and answer the question, how big a house can you buy?

Of course, location has a lot to do with how much a nice home will cost. $400,000 will buy a mansion in some areas of the country but might not go far in other areas. Mortgage rates have a lot to do with housing trends, too. Mortgage rates hit record highs in 2023 but are expected to come down a little in 2024. So, why did mortgage rates go up so much in 2023? It was because of high inflation. Now, inflation is better, so that should mean less volatility in mortgage rates. So, look for more stable mortgage rates in 2024, albeit still on the high side.

As for the availability of homes, inventory was super low in 2023. Thankfully, according to Zillow, "After a year of low inventory, the housing market is finally getting more choice again. More sellers are expected to list their homes for sale as they come to terms with the fact that we appear to be in an era of higher mortgage rates." That's great news.

So, how big a house can you buy? Zillow has a mortgage calculator that allows you to predict a comfortable mortgage amount based on your current financial situation and income. All you have to do is enter details about your income, monthly debts and an estimated down payment. Then, Zillow will churn out how expensive a home you can afford. It might be a bit depressing, just to warn you. Or, you may be pleasantly surprise. Use Zillow's calculator here. Also, Rocket Mortgage has their own version of the calculator, which is a bit different. Try theirs here.

As workers get older and continue on their career paths, in theory, their 401K should reflect that and go up. So, the average and median amount of money that people have in their 401Ks end up being a factor of how long they've worked (their age). It's also, of course, a factor of how much money they make and put into their 401Ks. So, have you ever wondered if you have more or less in your 401K than most people your age?

Let's get into retirement details. According to Fidelity, "The age you plan to retire can have a big impact on the amount you need to save, and your milestones along the way," they state on their website. "The longer you can postpone retirement, the lower your savings factor can be." They add that if you delay saving, your savings will take a longer time to grow.

Also, if you're wondering how much money you need to retire comfortably, that really is different for everyone. You have to look at how you want to live in your retirement. Do you want to have lots of extra money to travel? Or, would you rather retire earlier with less and live a less elaborate lifestyle?

According to Citizensbank.com, you want to have enough money to make up 60% to 100% of your pre-retirement annual income. "This rule of thumb aims to maintain a quality of life similar to the one you enjoy immediately prior to retirement, while keeping in mind the realities of different budget levels per line item, like lower work-related and housing costs likely offset by higher healthcare costs," they explain. They also say that "becoming a 'millionaire' is still an impressive financial milestone, but $1 million today doesn't go nearly as far as it did in 1980, when $1 million had the same buying power as $3.1 million today."

Now, let's get into the question at hand. How does your retirement savings hold up to those in your age group? Here are some details from Vanguard.

In this age group, the average 401K balance is $5,236 and the median is $1,948. You're obviously just getting your feet wet in investing. Some people fresh out of high school or college probably don't have anything in their 401Ks at this point.

In this age group, the average 401K balance is $30,017 and the median is $11,357. This is significantly higher than the under 25 age range. But, it's definitely not enough to retire on. So, keep grinding.

In this age group, the average 401K balance is $76,354 and the median is $28,318. Notice the big difference between average and median. Obviously, with the median, that means half of people in that age group have less than $28,318 and half have more.

In this age group, the average 401K balance is $142,069 and the median is $48,301. This is another one where the average and median are very different. Half of people in that age group have less than $48,301 and half have more.

In this age group, the average 401K balance is $207,874 and the median is $71,168. Some people "early retire" in this age group. But, only if you have enough cash. People with pensions are sometimes able to retire in this age group. Also, you can receive Social Security retirement benefits as early as age 62.

In this age group, the average 401K balance is $232,710 and the median is $70,620. Since you can receive Social Security retirement benefits as early as age 62, many people do choose to retire when they hit 65.

So, there you have it, the average and median 401K balance by age. The stats are from Vanguard's "How America Saves 2023" report, which offers data on the average and median 401K account balances by age. Find the full report here.