First-Time Homebuyers: How Much You’ll Need to Earn to Buy a Home in 10 U.S. Cities

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First-Time Homebuyers: Here's What It Costs to Buy in 10 U.S. Cities

When you begin getting serious about buying a home, it’s natural to worry about whether you can really afford it — not just how you’ll come up with the down payment, but whether you can even qualify for a loan. Of course, that depends to a large degree on your credit score and how much house can you buy relative to your income.

Then there’s the matter of the cost of housing where you live. Those are a lot of moving parts to consider. Allow us to try to simplify the thought process a bit. Here’s what it takes to buy a home in 10 U.S. cities, according to a National Association of Realtors report.

 

Income needed to buy a home in 10 U.S. cities

2012 median single-family home price 2014 median single-family home price % increase in price Qualifying income (10% down payment)
Austin, Texas $206,000 $240,700 16.8% $50,756
Boston $351,200 $389,800 11% $79,778
Charlotte, N.C. $156,600 $193,800 23.6% $40,139
Chicago $175,300 $205,900 17.5% $40,618
Denver $252,400 $310,200 22.9% $65,538
Miami $230,100 $266,000 31% $55,170
Orlando, Florida $134,000 $180,000 34.3% $37,474
Portland, Oregon $232,900 $286,000 22.8% $60,146
Raleigh, N.C. $188,500 $208,600 10.7% $44,386
Washington, D.C. $352,000 $383,800 9% $77,613

Where you live makes a big difference

Even though home prices continue to rise throughout much of the nation, interest rates — although creeping up — remain very low. Based on two years of data through the end of 2014, the annual income needed to buy a home among the 10 cities surveyed by NAR ranged from $37,474 in Orlando, Florida, to $79,778 in Boston.

In its calculation, NAR assumed a buyer making a 10% down payment on the purchase price of a median-square-footage home in each market.

The seller’s market exception

“Hot market” cities such as San Jose, California, where the median home sells for $900,000, or San Francisco, where you’ll pay $748,300 for a typical house, aren’t included in this report. Those markets abide by their own rules.

Also not included are the more affordable markets in the nation, such as Youngstown, Ohio ($64,300 for a typical house) or Cumberland, Maryland ($71,600). For the sake of comparison, NAR reports that the national median existing single-family home price in the first quarter of this year was $205,200.

First-time homebuyers

For first-time homebuyers, information is all but priceless. Considering home prices, your credit history and how much money you make can lend a valuable perspective to your decision tree. The fewer surprises, the better, right?

Hal Bundrick is a staff writer at NerdWallet, a personal finance website. Email: hal@nerdwallet.com. Twitter: @halmbundrick.


Image via iStock.