If you’re considering buying a home, you probably have a lot of questions. One being, how much do you need to earn in a year to afford a mortgage in the U.S.?
Since home prices vary state-by-state, the salary you need to qualify for a mortgage in the U.S. depends a great deal on where you live. For example, the median price of a home in New York is typically more expensive than a home in Wisconsin. When shopping for a house, you might want to consider looking outside of America’s largest cities.
Last month, HSH.com used the National Association of Realtors’ 2020 third-quarter data to track the most expensive cities in the U.S., and how much a potential homeowner would need to earn to live comfortably.
Here’s a look at how much you need to earn in five of the largest U.S. cities:
1. New York City, New York
Buying a home in the U.S. is no easy feat; especially in New York City. The city is considered one of the most expensive places to live, and prices have only increased due to the housing boom.
Median home price: $480,000
Salary needed: $104,000
Monthly payment: $2,000
2. Los Angeles, California
Median home price: $701,000
Salary needed: $122,000
Monthly payment: $3,000
More for Real Estate Enthusiasts
3. Chicago, Illinois
The average home price in the U.S surged in 2020, and Chicago’s housing market was no different. And it looks the surge will continue into 2021 due to a tight supply of homes and low mortgage rates.
Median home price: $299,000
Salary needed: $66,000
Monthly payment: $1,600
4. Houston, Texas
In December 2020, Houston saw 25% growth in home sales compared to the same month the previous year. The housing market in Houston is booming, with buyers paying high prices for average homes.
Median home price: $272,000
Salary needed: $60,000
Monthly payment: $1,400
5. Phoenix, Arizona
Realtor.com’s 2021 Housing Forecast predicts home sales in Phoenix, Arizona will increase 11.4% from last year. These numbers will make Phoenix one of the hottest housing markets in 2021.
Median home price: $342,000
Salary needed: $59,000
Monthly payment: $1,400
Contrary to popular belief, how much you earn isn’t the only criteria for getting a mortgage. Lenders look at far more than your paycheck. They look at your credit score and debt-to-income ratio, which is the percentage of your monthly gross income that goes toward paying debts and your projected down payment.
And while these cities require a higher salary, cities like Oklahoma City ($34,000 salary needed), Cleveland ($41,000 salary needed) and Indianapolis ($44,000 salary needed) are much more affordable.
The post The salary needed to buy a home in five large U.S. cities appeared first on HousingWire.