The higher home prices go, the harder it is for your buyers to qualify for a mortgage.

HSH.com’s Quarterly Report on Income Requirements to Afford a “Typical” Home in Q2 2021

Every quarter of every year, HSH.com calculates how much a potential buyer would have to earn in order to qualify for a median-priced home in the 50 largest metros in the US.

 HSH bases its estimates on quarterly data from the National Association of REALTORS® (NAR) on median home prices, weekly data on national mortgage rate data by Freddie Mac, and mortgage rate data from the Mortgage Bankers Association (MBA).

 In addition, HSH looks at metro-specific property tax data and homeowners’ insurance costs to assess how much annual salary it takes to afford the base cost of owning a home in a particular metro.

Then, with the total of that data, HSH uses the standard 28% front-end debt ratio and the standard 20% down payment subtracted from NAR’s median-home-price data to get to the required income necessary in a given market area.

Q2 2021 Income Requirements +22% y/y Higher

According to NAR, the national median sale price in Q2 2021 was $357,900, approximately +22% y/y higher than in Q2 2020.

To qualify for a mortgage on a median-priced home in Q2 2021, the potential buyer would have needed an annual income of $68,032.  Monthly mortgage payments on that median-priced home in Q2 2021 would have been $1,587/month.

Income Requirements to Qualify for Mortgages

Here are the incomes needed to qualify for mortgages in the 10 most and 10 least affordable metros in the US during Q2 2021:

Least Affordable Metros with Highest Required Income

San Jose CA

  • Annual Income Needed – $286,703
  • Monthly Payment – $6,690

San Francisco

  • Annual Income Needed – $237,665
  • Monthly Payment – $5,546

San Diego

  • Annual Income Needed – $147,434
  • Monthly Payment – $3,440

Los Angeles

  • Annual Income Needed – $130,921
  • Monthly Payment – $3,055

Seattle

  • Annual Income Needed- $2,899
  • Monthly Payment – $2,899

Boston

  • Annual Income Needed – $123,534
  • Monthly Payment – $2,882

New York

  • Annual Income Needed – $118,042
  • Monthly Payment – $2,754

Denver

  • Annual income Needed – $104,739
  • Monthly Payment – $2,444

Washington DC

  • Annual income Needed – $104,118
  • Monthly Payment – $2,429

Austin

  • Annual Income Needed – $2,384
  • Monthly Payment – $2,384

Most Affordable Metros with Lowest Required Income

Pittsburgh

  • Annual income Needed – $38,275
  • Monthly Payment – $893

Oklahoma City

  • Annual Income Needed – $41,740
  • Monthly Payment – $974

Cleveland

  • Annual Income Needed – $44,090
  • Monthly Payment – $1,029

Louisville KY

  • Annual Income Needed – $44,314
  • Monthly Payment – $1,034

Memphis

  • Annual Income Needed – $47,272
  • Monthly Payment – $1,103

Indianapolis

  • Annual Income Needed – $47,731
  • Monthly Payment – $1,114

St. Louis

  • Annual Income Needed – $47,981
  • Monthly Payment – $1,120

Buffalo NY

  • Annual Income Needed – $1,139
  • Monthly Payment – $1,139

Birmingham AL

  • Annual income Needed – $49,164
  • Monthly Payment – $1,147

Cincinnati

  • Annual Income Needed – $49,367
  • Monthly Payment – $1,152

Thanks to HSH.com and The New York Times.

 

 

 

 

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