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The salary you must earn to buy a home in 27 metros

 

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

Cleveland Pittsburgh St. Louis Cincinnati Detroit Atlanta Tampa Phoenix Orlando San Antonio Minneapolis Dallas Houston Philadelphia Chicago Baltimore Sacramento Miami Denver Portland Seattle Washington Boston Los Angeles New York City San Diego San Francisco

 

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’ third-quarter data for median-home prices and HSH.com’s third-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, interest, taxes and insurance -- in 27 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. We've incorporated available information on property taxes and homeowner’s insurance costs to more accurately reflect the income needed in a given market. Read more about the methodology and inputs on the final slide of this slideshow.

Nationally, home-price gains continued to slow, returning price growth to more “normalized” levels in the third quarter, said Lawrence Yun, NAR chief economist. As far as interest rates are concerned, mortgage rates fell in every metro on our list but one, in which there was no change at all from the previous quarter. Lower mortgage rates and home prices have increased affordability, lowering the required salary for 15 of the 27 metro areas on our list.

On a national scale, with 20 percent down and at an average interest rate of 4.37 percent, the income needed to afford a median-priced home of $217,300 is $51,246.61.

It is of course possible to buy a home with less than a 20 percent down payment. However, the larger loan amount when financing 90 percent of the property price plus the need for Private Mortgage Insurance (PMI) raises the income needed considerably. In the national example above, a purchase of a median-priced home with only a 10 percent down payment (and including the cost of PMI) increases the income needed to $59,246.26 – about $8,000 more.

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

Mortgage rate: 4.12 percent

  • Quarterly change: -0.08 percent

Home price: $136,700

  • Quarterly change: -2.29 percent

Monthly payment: $755.38

Salary: $32,373.37

  • Quarterly change: -$754.83

The Pittsburgh metro area remains on top in terms of affordability for the second quarter in a row. The Steel City had the fourth-largest salary decline on our list.  The improvement in affordability for Pittsburgh was due to the fourth-largest decline in quarterly home prices and the lowest average mortgage rate on our list.

Mortgage rate: 4.23 percent

  • Quarterly change: -0.12 percent

Home price: $129,900

  • Quarterly change: +1.56 percent
  • YOY change: +2.28 percent

Monthly payment: $791.22

Salary: $33,909.27

  • Quarterly change: +$27.72

Especially in today’s turbulent economy, stability is something to be celebrated. Consistent home-price growth over the last quarter and the last year has left the required salary in the Cleveland metro area largely unchanged, with an increase in the third quarter of just $28.

Mortgage rate: 4.30 percent

  • Quarterly change: -0.10 percent

Home price: $145,000

  • Quarterly change: -7.05 percent
  • YOY change: -9.32 percent

Monthly payment: $833.75

Salary: $35,731.95

  • Quarterly change: -$2,181.37

The Tampa metro went from No. 6 on last quarter’s list to No. 3 for the third quarter thanks to some substantial home-price declines. In fact, Tampa’s price declines are by far the largest on our list, helping to reduce the required salary by over $2,000, the third-largest salary decline on our list.

Mortgage rate: 4.25 percent

  • Quarterly change: -0.13 percent

Home price: $149,000

  • Quarterly change: +1.15 percent
  • YOY change: +4.86 percent

Monthly payment: $834.52

Salary: $35,765.03

  • Quarterly change:  -$99.13

While the Cincinnati metro area climbed a spot higher on our list during the third quarter, the required salary actually declined by just under $100. Minimal quarterly price growth was held in check by a quarterly mortgage-rate decline of 0.13 percent, the second-largest decline on this quarter’s list.

Mortgage rate: 4.21 percent

  • Quarterly change: -0.09 percent

Home price: $150,200

  • Quarterly change: +0.20 percent
  • YOY change: +4.52 percent

Monthly payment: $835.33

Salary: $35,799.96

  • Quarterly change: -$220.51

St. Louis continues to edge its way higher up our list, swapping places with Detroit as the fifth-most-affordable metro area we surveyed. While the required salary is nearly identical to Cincinnati (a mere $35 difference), the decline in required salary in the Gateway to the West was more than double that of Cincinnati’s during the third quarter thanks to virtually no price growth and a decline in mortgage rates.

Mortgage rate: 4.23 percent

  • Quarterly change: -0.10 percent

Home price: $167,500

  • Quarterly change: +0.78 percent
  • YOY change: +9.98 percent

Monthly payment: $884.10

Salary: $37,889.82

  • Quarterly change: -$115.45

While the Atlanta metro area’s strong year-over-year home-price gains continue, so do the erratic quarterly price numbers. In 2014, home prices declined in Atlanta by 0.35 percent in the first quarter, shot up by over 17 percent in second quarter, and edged up by just 0.78 percent in the third. The slower price gain combined with a drop in interest rates had Atlanta-area homebuyers enjoying more affordable conditions in the third quarter.

Mortgage rate: 4.34 percent

  • Quarterly change: -0.07 percent

Home price: $151,500

  • Quarterly change: +11.15 percent 
  • YOY change: +15.38 percent

Monthly payment: $901.47

Salary: $38,634.33

  • Quarterly change: +$2,398.30

Detroit may be the only metro area on this list that is celebrating a decline in affordability. Continued price gains are desperately needed in the Detroit area, and that’s what homebuyers and sellers are getting. The highest mortgage rates on our list combined with the strongest overall price gains by far, led Detroit to the second-highest salary increase, behind only Los Angeles. (We want to thank Realcomp for providing us with the Detroit metro home-price data.)

Mortgage rate: 4.23 percent

  • Quarterly change: -0.05 percent

Home price: $200,500

  • Quarterly change: +0.96 percent 
  • YOY change: +4.59 percent

Monthly payment: $965.32

Salary: $41,370.85

  • Quarterly change: +$120.33

Phoenix is No. 8 on our list yet again. Although Phoenix was the first metro area to experience a decline in its required salary last quarter, the increase of $120 during the third quarter is the second-smallest increase on our list.

Mortgage rate: 4.20 percent

  • Quarterly change: -0.06 percent

Home price: $180,000

  • Quarterly change: -1.10 percent 
  • YOY change: +7.27 percent

Monthly payment: $994.23

Salary: $42,609.71

  • Quarterly change: -$554.25

After a minimal price gain in the second quarter, Orlando home prices barely declined during the third quarter, bringing the required salary down by $554. Price gains seem to be fading in the Orlando metro, perhaps causing homeowners a bit of stress, but producing more affordable opportunities for homebuyers.

Mortgage rate: 4.28 percent

  • Quarterly change: -0.12 percent

Home price: $186,400

  • Quarterly change: +1.19 percent 
  • YOY change: +6.51 percent

Monthly payment: $1,078.73

Salary: $46,231.29

  • Quarterly change: -$73.68

San Antonio remains the most affordable Texas metro area on our list. A sizeable decline in mortgage rates and only a small increase in home prices kept affordability very stable in the San Antonio metro area, as the required salary fell by $74.

Mortgage rate: 4.25 percent

  • Quarterly change: -0.09 percent

Home price: $219,100

  • Quarterly change: +2.91 percent
  • YOY change: +5.34 percent

Monthly payment: $1,164.71

Salary: $49,915.96

  • Quarterly change: +$660.09

Again, Minneapolis is the first metro area on our list to crack the $200,000 home-price mark. Yet with the third-quarter national median-home price at $217,300, the Minneapolis metro market remains slightly below the middle of the national marketplace.

Mortgage rate: 4.31 percent

  • Quarterly change: -0.05 percent

Home price: $193,500

  • Quarterly change: +1.15 percent 
  • YOY change: +6.73 percent

Monthly payment: $1,173.29

Salary: $50,283.73

  • Quarterly change: +$180.75

While the required salary in the Dallas metro continues to rise, the third-quarter increase of $181 was less painful than the second-quarter increase of about $2,400. In September, Dallas Realtors reported to Credit Suisse (a global financial services company) that home inventories remained tight, and tight supplies tend to cause prices to rise.

Mortgage rate: 4.26 percent

  • Quarterly change: -0.08 percent

Home price: $202,500

  • Quarterly change: -0.74 percent 
  • YOY change: +8.52 percent

Monthly payment: $1,194.68

Salary: $51,200.70

  • Quarterly change: -$581.86

Even though the required salary declined almost $600 from the previous quarter, Houston remains the most expensive Texas metro on our list. Of the three Texas metros we include, Houston was the only one to see a quarterly price decline, but it maintained the strongest year-over-year growth. Houston Realtors reported to Credit Suisse that the Houston market is returning to more normalized levels after years of spiking prices.

Mortgage rate: 4.29 percent

  • Quarterly change: -0.09 percent

Home price: $231,300

  • Quarterly change: +1.80 percent
  • YOY change: -0.13 percent

Monthly payment: $1,274.12

Salary: $54,605.32

  • Quarterly change: +$282.30

Affordability stabilized in the City of Brotherly Love during the third quarter, following wider swings in home prices during the first half of the year. A nine-basis-point decline in mortgage rates wasn’t enough to counterbalance a 1.8-percent increase in home prices, driving the required salary higher by nearly $300 in the Philadelphia metro area.

Mortgage rate: 4.19 percent

  • Quarterly change: -0.10 percent

Home price: $255,800

  • Quarterly change: +0.08 percent
  • YOY change: -4.02 percent

Monthly payment: $1,334.41

Salary: $57,189.18

  • Quarterly change: -$479.23

Home prices seem to be working in favor of buyers rather than sellers in the Baltimore metro area. A small decline in rates and virtually no change in the quarterly home-price numbers allowed the required salary to fall nearly $500 from the second-quarter figure.

Mortgage rate: 4.21 percent

  • Quarterly change: -0.15 percent

Home price: $221,800

  • Quarterly change: +1.74 percent 
  • YOY change: +6.12 percent

Monthly payment: $1,383.56

Salary: $59,295.64

  • Quarterly change:  -$19.85

Last quarter we observed some “staggering” increases in the Windy City metro.  The only thing that caused the Chicago area to stand out this time around was that they had the largest quarterly mortgage-rate decline of all the metros on our list. Other than that, things were quite stable during the third quarter, as the required salary fell by just $20, the smallest salary decline in our group.

Mortgage rate: 4.26 percent

  • Quarterly change: -0.11 percent

Home price: $270,000

  • Quarterly change: 0 percent
  • YOY change: +7.06 percent

Monthly payment: $1,404.11

Salary: $60,175.94

  • Quarterly change: -$598.46

Last quarter we wrote, “Relatively speaking, the Miami metro real estate market has been quiet with stable home-price appreciation and a decline in mortgage rates that lands it in the middle of the pack on our list.” The same was true during the third quarter, as home prices didn’t budge and mortgage rates declined, allowing the required salary to fall a few hundred dollars short of the average decline on this list.

Mortgage rate: 4.33 percent

  • Quarterly change: -0.04 percent

Home price: $275,300

  • Quarterly change: +1.59 percent
  • YOY change: +7.58 percent

Monthly payment: $1,406.81

Salary: $60,291.82

  • Quarterly change: +$513.29

With nearly two percentage points of price appreciation and a rate decline of just 0.04 percent, the Sacramento area was less affordable than Miami during the third quarter causing them to switch places on this list. Still, the monthly payment in Sacramento is only $2 higher than in Miami.

Mortgage rate: 4.28 percent

  • Quarterly change: -0.10 percent

Home price: $291,300

  • Quarterly change: +1.78 percent 
  • YOY change: +5.47 percent

Monthly payment: $1,446.49

Salary: $61,992.24

  • Quarterly change: +$286.05

The Portland metro area continued to exhibit modest quarterly and year-over-year price growth. This consistency, matched with a rate decline of 10 basis points, kept the salary figure in check, as it increased by less than $300.

Mortgage rate: 4.28 percent

  • Quarterly change: -0.08 percent

Home price: $315,500

  • Quarterly change: -0.25 percent
  • YOY change: 9.97 percent

Monthly payment: $1,470.44

Salary: $63,019.00

  • Quarterly change: -$645.45

Denver, a metro area we described last quarter as the “model of real estate consistency for a while now,” actually showed a home-price decline from the second to the third quarter. While the year-over-year price gains are still there, both interest-rate and home-price declines led to an annual salary figure nearly $650 cheaper than the prior quarter.

Mortgage rate: 4.28 percent

  • Quarterly change: 0 percent

Home price: $359,900

  • Quarterly change: +0.70 percent
  • YOY change: +1.47 percent

Monthly payment: $1,752.29

Salary: $75,098.06

  • Quarterly change: +$423.17

No change in the interest rate from the second to third quarter along with basically no change in home prices kept things relatively stable in the Seattle metro area, as the required salary increased by $423.

Mortgage rate: 4.20 percent

  • Quarterly change: -0.10 percent

Home price: $389,100

  • Quarterly change: -3.59 percent
  • YOY change: -0.87 percent

Monthly payment: $1,907.68

Salary: $81,757.93

  • Quarterly change: -$3,241.21

It was surprising to see affordability increase in the D.C. metro area because of a drop in home prices. The near-4-percent decline in home prices went against expectations of an increase, taking the required salary down along with it, producing the second-highest salary decline on our third-quarter list. 

Mortgage rate: 4.26 percent

  • Quarterly change: -0.05 percent

Home price: $399,900

  • Quarterly change: +0.45 percent
  • YOY change: +1.57 percent

Monthly payment: $1,971.10

Salary: $84,475.91

  • Quarterly change: -$96.41

The steep decline in required salary in the D.C. metro moved Boston higher on our list without taking a bite out of Bean Town’s affordability. Affordability conditions remain stable in the Boston area, thanks to a minor decline in rates and a small increase in prices during the third quarter.

Mortgage rate: 4.37 percent

  • Quarterly change: -0.01 percent

Home price: $410,800

  • Quarterly change: +3.55 percent
  • YOY change: +1.08 percent

Monthly payment: $2,153.00

Salary: $92,271.49

  • Quarterly change: +$2,332.04

The New York City metro area cured itself of the year-over-year price depreciation it suffered from in the second quarter, moving into positive YOY gains during the third quarter. The Big Apple experienced the third-highest required-salary increase, as the effect of a 3.5 percent increase in prices more than overcame a small decline in the average interest rate, causing the required salary to inflate by over $2,300.

Mortgage rate: 4.25 percent

  • Quarterly change: -0.08 percent

Home price: $481,900

  • Quarterly change: +14.66 percent
  • YOY change: +7.35 percent

Monthly payment: $2,251.99

Salary: $96,513.65

  • Quarterly change: +$9,713.25

Affordability took a huge hit in the L.A. metro area during the third quarter as the required salary increased by nearly $10,000. The small decline in rates was no match for the huge quarterly price increase, the largest quarterly gain of all the 27 metro areas on our list.  

Mortgage rate: 4.28 percent

  • Quarterly change: -0.07 percent

Home price: $517,800

  • Quarterly change: +2.7 percent
  • YOY change: +6.76 percent

Monthly payment: $2,372.59

Salary: $101,682.60

  • Quarterly change: +$1,590.86

San Diego remains the second most-expensive California metro on our list and the second most-expensive metro (overall) on our list. Moderate home-price gains led to an increase in the required salary for homebuyers of almost $1,600. Price gains on top of already high home prices continue to separate San Diego from the rest of the pack (save for the last city on our list, of course).

Mortgage rate: 4.20 percent (jumbo rate)

  • Quarterly change: -0.06 percent

Home price: $744,400

  • Quarterly change: -3.27 percent
  • YOY change: +5.59 percent

Monthly payment: $3,391.76

Salary: $145,361.06

  • Quarterly change: -$5,150.82

Even with the largest quarterly decline in the required salary (thanks in part to a 3.27 percent decline in quarterly prices), the San Francisco metro remains the king of high prices. While any gain in affordability is welcomed in the Bay Area, the difference in required salary to buy in the San Francisco metro versus the San Diego metro is still a whopping $43,678, and almost $113,000 more per year than the most affordable metro in our survey.

To compile these results, HSH.com calculated the annual before-tax income required to cover the mortgage's principal, interest, tax and insurance payment. We used standard 28 percent "front-end" debt ratios and a 20 percent down payment subtracted from the median-home-price data to arrive at our figures. Loans with less than a 20 percent down payment will incur mortgage insurance, which would in turn increase the required salary.

We utilized the NAR’s 2014 third-quarter data for median home prices and our 2014 third-quarter average interest rate for a 30-year, fixed-rate mortgage to determine how much money homebuyers in 27 major metro areas would need to earn in order to purchase the median-priced home in their market.

The average mortgage rate information we utilized was for purchase-money mortgages made to borrowers with good to excellent credit.

We created metropolitan-area average property tax information from data made available from the Tax Foundation (http://www.taxfoundation.org), a non-partisan research think tank, based in Washington, D.C.

We utilized statewide average homeowner insurance premium costs from the Insurance Information Institute (http://www.iii.org), whose mission is to improve public understanding of insurance.

Note: Property taxes and insurance costs are specific to an individual property itself and will be different for any single property in which you may have an interest. Also, if other personal debts exceed 8 percent of one’s given monthly gross income, this will increase the salary needed to qualify.

Data for the Pittsburgh metro area was provided by RealSTATs, a locally owned and operated real estate information company. Home-price data for Detroit was provided by Realcomp II Ltd., Michigan’s largest Multiple Listing Service.

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FHA 15 Yr. - Purchase Rates from Our Lenders in Virginia

Lenders
Rate
APR
Monthly Payment
Quicken Loans
3.125%
3.497%
$1,393
Last Updates: 12/18/2014 See More Rates
 
Cities 30-Year Fixed Mortgage Rate % Change from 2Q14 Median-Home Price % Change from 2Q14 Monthly Payment (PITI) Salary Needed
Pittsburgh 4.12% -0.08% $136,700 -2.29 $755.38 $32,373.37
Cleveland 4.23% -0.12% $129,900 +1.56 $791.22 $33,909.27
Tampa 4.30% -0.10% $145,000 -7.05 $833.75 $35,731.95
Cincinnati 4.25% -0.13% $149,000 +1.15 $834.52 $35,765.03
St Louis 4.21% -0.09% $150,200 +0.20 $835.33 $35,799.96
Atlanta 4.23% -0.10% $167,500 +0.78 $884.10 $37,889.82
Detroit 4.34% -0.07% $151,500 +11.15 $901.47 $38,634.33
Phoenix 4.23% -0.05% $200,500 +0.96 $965.32 $41,370.85
Orlando 4.20% -0.06% $180,000 -1.10 $994.23 $42,609.71
San Antonio 4.28% -0.12% $186,400 +1.19 $1,078.73 $46,231.29
Minneapolis 4.25% -0.09% $219,100 +2.91 $1,164.71 $49,915.96
Dallas 4.31% -0.05% $193,500 +1.15 $1,173.29 $50,283.73
Houston 4.26% -0.08% $202,500 -0.74 $1,194.68 $51,200.70
Philadelphia 4.29% -0.09% $231,300 +1.80 $1,274.12 $54,605.32
Baltimore 4.19% -0.10% $255,800 +0.08 $1,334.41 $57,189.18
Chicago 4.21% -0.15% $221,800 +1.74 $1,383.56 $59,295.64
Miami 4.26% -0.11% $270,000 +0.00 $1,404.11 $60,175.94
Sacramento 4.33% -0.04% $275,300 +1.59 $1,406.81 $60,291.82
Portland 4.28% -0.10% $291,300 +1.78 $1,446.49 $61,992.24
Denver 4.28% -0.08% $315,500 -0.25 $1,470.44 $63,019.00
Seattle 4.28% 0.00% $359,900 +0.70 $1,752.29 $75,098.06
Washington 4.20% -0.10% $389,100 -3.59 $1,907.68 $81,757.93
Boston 4.26% -0.05% $399,900 +0.45 $1,971.10 $84,475.91
New York City 4.37% -0.01% $410,800 +3.55 $2,153.00 $92,271.49
Los Angeles 4.25% -0.08% $481,900 +14.66 $2,251.99 $96,513.65
San Diego 4.28% -0.07% $517,800 +2.70 $2,372.59 $101,682.60
San Francisco 4.20% -0.06% $744,400 -3.27 $3,391.76 $145,361.06