Washington, D.C., is known for its insane cost of living, especially when it comes to buying a home. Check out the salary you would need to afford an average home in the District.
Buying a home is a huge milestone, but also a huge financial commitment. So what salary do you need to comfortably buy a home in Washington, D.C.? LendingTree, the online lending exchange company, examined the salary you would need to afford a home in the top 50 metropolitan areas.
The company analyzed data from ATTOM Data Solutions to find out the salary you would need to afford a median-priced home in each city. LendingTree used a complex formula examining factors such as the property tax rates for each area. They assumed that borrowers from all cities:
- Secured a mortgage with a 4.5% interest rate
- Had a 10% down payment
- Paid a private mortgage insurance premium of 0.25%
- Had a debt-to-income ratio of 28%
Overall, Washington, D.C., ranked as the city with the 7th highest salary requirements to afford a home. The median home price in 2017 was $365,000 and the monthly mortgage payment was $1,014. Washington, D.C., residents need to make $85,152 to comfortably afford a home.
Ranking at No. 1 is San Jose, California, where you would need to make $221,218 to afford a median-priced home at $960,000. San Jose is followed by San Franciso, California; Los Angeles, California; San Diego, California; and Seattle, Washington.
If you are looking for truly affordable housing, check out Indianapolis, Indiana; Cleveland, Ohio; Rochester, New York; Oklahoma City, Oklahoma; or Memphis, Tennessee. In Memphis, the last-place ranking city, you only need to make $32,111 to afford a home.
LendingTree urges readers not to get upset by the study results.
“Folks shouldn’t feel discouraged by these median numbers if their particular income falls short of that level; it doesn’t mean they’re excluded from the market,” said Tendayi Kapfidze, LendingTree’s chief economist, who ran the analysis. “It just means they’ll probably have to search a little more diligently since supply is tighter.”
What do you think? Surprised by the results? Let us know in the comments below!