As home prices continue to rise and mortgage rates creep ever higher, it can feel as if homeownership is increasingly out of reach for many Americans.
Salary plays an important role in determining how much house you can afford. That’s because lenders are going to calculate your debt-to-income ratio when you apply for a mortgage. This helps them determine how much of your monthly income will be going toward your monthly debt obligations, which will include your new mortgage payment.
The higher your salary, the more house you can probably afford.
Location matters, too. In cities where home prices are quite high, it likely means homebuyers will need to have a relatively high income in order to qualify for sufficient financing.
So how much do you reasonably need to be earning to afford a median-priced home in the U.S.?
LendingTree, which is the parent company of MagnifyMoney, analyzed public property data from ATTOM Data Solutions to find out what salary you’d need to afford a typical home in the top 50 biggest metro statistical areas in the U.S.
To paint the most accurate picture, they assumed that borrowers:
Here are the cities where you need to earn the most to afford a median priced home:
#1 San Jose/Sunnyvale/Santa Clara, Calif.
#2 San Francisco/Oakland/Hayward, Calif.
#3 Los Angeles/Long Beach/Anaheim, Calif.
#4 San Diego/Carlsbad, Calif.
#5 Seattle/Tacoma/Bellevue, Wash.
#6 New York, Newark/Jersey City, N.J., Pa.
#7 Washington D.C./Arlington/Alexandria, Va., Md.-W. Va
#8 Portland/Hillsboro, Ore., Vancouver, Wash.
#9 Sacramento/Roseville/Arden/Arcade, Calif.
#10 Denver/Aurora/Lakewood, Colo.
Here are the cities with the LOWEST required salary to afford a median priced home:
#1 Memphis, Tenn. -Miss.-Ark.
#2 Oklahoma City
#3 Rochester, N.Y.
#4 Cleveland/Elyria, Ohio
#5 Indianapolis/Carmel/Anderson, Ind.
#6 Birmingham/Hoover, Ala.
#7 Louisville, Ky./Jefferson County, Ind.
#8 Buffalo/Cheektowaga/Niagara Falls, N.Y.
#9 Pittsburgh, Pa.
#10 Detroit/Warren/Dearborn, Mich.
MORE FROM MAGNIFYMONEY:
MagnifyMoney is a price comparison and financial education website, founded by former bankers who use their knowledge of how the system works to help you save money.
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