A recent article shows how wide ranging the cost of homeownership is across the country. I spoke to KOMO-Radio in Seattle about some of the costs and how the numbers don’t quite tell the full story of what it takes to own a home, specifically a median-priced home in the Seattle market.
The article tracked the income required to pay for the principal, interest, taxes and insurance on a median-priced home in 27 metro areas across the country. In some areas like San Francisco the income needed was $142,448. On the flip side, Cleveland was just $32,010. The article stated the median priced home in Seattle is $352,000 and you need an income of $72,844 to afford such a home.
However, the information assumes that buyers will make a down payment equal to 20 percent of the purchase price of the home. At a $352,000 price point, this amounts to a down payment of over $70,000. Considering that many of the buyers of a home in this price range will be first-time homebuyers, a 20% down payment is unlikely.
The good news is that if your household income is $72,844 in Seattle, you may still qualify to purchase the median priced home of $352,000 but with as little as 3%-5% for the down payment. Qualifying for a mortgage loan depends on a lot of factors, including your credit history, the stability of your income, and the other debts you will have besides the house payment. Borrowers with minimal consumer debt will typically qualify for larger mortgage amounts than other similar financially-situated borrowers that have a large amount of consumer debt.
Homeownership doesn’t require a 20% down payment or perfect credit, and owning a home is still a good long-term investment. With interest rates still very low, now may be a great time to buy a home. At Evergreen Home Loans we encourage buyers, especially first-time homebuyers, to work with our experienced mortgage loan originators to find a home loan option that works for their financial situation and meets their needs.