Shaun Vembutty | How Much You’ll Need to Earn to Make Mortgage Payments in 15 Big Cities
Just because you’re not raking in the big bucks — or, perhaps, many bucks at all — it doesn’t mean you can’t become a homeowner, even in a big city.
Buyers need to earn only $20,294 a year to make their monthly payments on a median-price home in … wait for it … Indianapolis, according to a recent study from SmartAsset. Buyers in the Midwestern metropolis had the lowest monthly housing bills of the 15 cities measured in the report.
The personal finance website looked at the minimum salary buyers need to qualify for a 30-year mortgage with a 4% interest rate, and to afford the monthly loan, real estate taxes, and home insurance payments in the largest U.S. cities.
That assumes buyers aren’t carrying any debt and have a 20% down payment at the ready — which, to be honest, doesn’t describe many first-time home buyers (especially those making $20,000 per year).
It also explains why they’re able to make so little and still afford a home — they would be forking over about 36% of their income before taxes on housing costs. True, that doesn’t leave much left over for other expenses like cellphone or cable bills, let alone a night out. But it does meet the 40% of income threshold that buyers typically need to qualify for a loan (again, provided they don’t have debt and have excellent credit). Read More…