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Can You Afford to Buy a Home?
Here’s what you need to earn in a year to get a mortgage for a median-priced home in the largest U.S. cities.
- Dec. 31, 2020Updated 1:46 p.m. ET
In this pandemic economy, homes are scarce and competition for them is fierce, meaning prices are rising even as many Americans have less money to spend. How do you know if you can afford a home in a particular city? HSH.com’s quarterly report, which breaks down the annual income required to qualify for a mortgage in the country’s 50 largest metropolitan areas, is a good starting point.
Using 2020 third-quarter pricing data from the National Association of Realtors, and factoring in the industry standard 28 percent debt-to-income ratio to qualify prospective borrowers, the report determined the earnings required to qualify for a median-priced home in each area. (A 20 percent down payment and a fixed-rate, 30-year mortgage at current rates were assumed, and local property taxes and homeowner’s insurance costs were included.)
To buy a home at the national median price during Q3 2020 — $313,500 — a buyer needed an annual income of $60,770, according to the report. In Pittsburgh, where the median home was listed at $177,250, a buyer needed $38,266 of yearly earnings. Compare that with San Jose, Calif., where buying such a home required a hefty annual income of $243,303.
All 50 metro areas surveyed saw year-over-year increases in required income during Q3 2020; during the second quarter, that was the case in only six areas. This week’s chart shows what you’d need to earn in the 10 most affordable and 10 least affordable metros, and what your monthly payment would be in each.
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METROPOLITAN AREAS WITH THE LOWEST
REQUIRED INCOME FOR MORTGAGES
METROPOLITAN AREAS WITH THE HIGHEST
REQUIRED INCOME FOR MORTGAGES
$46,055
Buffalo
$243,303
San Jose, Calif.
$1,075
Monthly payment: $5,677
$45,558
Birmingham, Ala.
$199,465
San Francisco
$1,063
$4,654
$45,040
St. Louis
$124,824
San Diego
$1,051
$2,913
$44,388
Cincinnati
$122,112
Los Angeles
$1,036
$2,849
$44,183
Memphis
$110,943
Boston
$1,031
$2,589
$43,688
Indianapolis
$108,357
Seattle
$1,019
$2,528
$42,129
Louisville, Ky.
$103,911
New York
$983
$2,425
$41,210
Cleveland
$91,548
Washington
$962
$2,136
$39,567
Oklahoma City
$86,950
Denver
$923
$2,029
$38,266
Pittsburgh
$83,189
Portland, Ore.
$893
$1,941
METROPOLITAN AREAS WITH THE HIGHEST
REQUIRED INCOME FOR MORTGAGES
$243,303
San Jose, Calif.
Monthly payment: $5,677
$199,465
San Francisco
$4,654
$124,824
San Diego
$2,913
$122,112
Los Angeles
$2,849
$110,943
Boston
$2,589
$108,357
Seattle
$2,528
$103,911
New York
$2,425
$91,548
Washington
$2,136
$86,950
Denver
$2,029
$83,189
Portland, Ore.
$1,941
METROPOLITAN AREAS WITH THE LOWEST
REQUIRED INCOME FOR MORTGAGES
$46,055
Buffalo
$1,075
$45,558
Birmingham, Ala.
$1,063
$45,040
St. Louis
$1,051
$44,388
Cincinnati
$1,036
$44,183
Memphis
$1,031
$43,688
Indianapolis
$1,019
$42,129
Louisville, Ky.
$983
$41,210
Cleveland
$962
$39,567
Oklahoma City
$923
$38,266
Pittsburgh
$893
Be mindful that other home expenses, such as utilities, maintenance and repairs, are not included in these monthly payments amounts. And while list prices were used to determine the figures in the chart, bidding wars can push final sale prices — and your payments — higher than what’s shown.
For weekly email updates on residential real estate news, sign up here. Follow us on Twitter: @nytrealestate.
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