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The salary you must earn to buy a home in 25 cities

 
 

Chicago

How much salary do you need to earn in order to afford the principal and interest payments on a median-priced home in your metro area?

To find out, HSH.com took the National Association of Realtors’ fourth-quarter data for median home prices and HSH.com’s fourth-quarter average interest rate for 30-year, fixed-rate mortgages to determine how much of your salary it would take to afford the base cost of owning a home—the principal and interest—in 25 metro areas.

We used standard 28 percent "front-end" debt ratios, and a 20 percent down payment subtracted from the NAR’s median-home-price data to arrive at our figures. There is no doubt that your income will need to be much higher to cover taxes, insurances and other expenses to live in the home, plus any other debts you might have.

While the NAR continues to report strong year-over-year price growth, home prices and mortgage rates retreated from the third to fourth quarter in 2013. While homeowners continue to praise home-price growth as it adds to their equity positions, some homebuyers have actually been stymied by the rapid growth as home prices have been rising faster than incomes.

All in all, the fourth quarter was a great time to buy as lower prices and mortgage rates increased affordability, allowing buyers to make less money and still afford a median-priced home in their market.

Here’s a current look at how much salary you would need to spend in order to afford the principal and interest on the median-priced home in your metro.

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