Here’s How Much Income You Need To Make To Afford The Average Home In Every State In 2018
As we found out back in March, buying a home versus renting one in a major metropolitan area is becoming a bit of a problem. The price you now have to pay on average to purchase a house has continued to go up. Which would be not as difficult to swallow if the average cost of rent wasn’t also increasing.
We’ve also seen how much income one needs to make to be able to afford a house in the 10 most expensive zip codes in the U.S. (Hint: It’s a lot.)
In an effort to find out where home buyers are getting priced out of the market, and where they are not, the cost information website HowMuch.net collected the average home prices for every state from Zillow which they then plugged into a mortgage calculator to figure out monthly payments.
The interest rate we used varied from 4 to 5% in each state, depending on the market. The lower the interest rate, the lower the monthly payment. To keep things simple, we assumed buyers could contribute a 10% down payment. Another thing to keep in mind is that financial advisors commonly recommend the total cost of housing take up no more than 30% of gross income (the amount before taxes, retirement savings, etc.). Using this rule as our benchmark, we calculated the minimum salary required to afford the average home in each state.
Got it? Good. Here’s what they discovered…
Top Five States Where You Need The Highest Salaries To Afford The Average Home
1. Hawaii: $153,520 for a house worth $610,000
2. Washington, DC: $138,440 for a house worth $549,000
3. California: $120,120 for a house worth $499,900
4. Massachusetts: $101,320 for a house worth $419,900
5. Colorado: $100,200 for a house worth $415,000
Top Five States Where You Need The Lowest Salaries To Afford The Average Home
1. West Virginia: $38,320 for a house worth $149,500
2. Ohio: $38,400 for a house worth $149,900
3. Michigan: $40,800 for a house worth $160,000
4. Arkansas: $41,040 for a house worth $161,000
5. Missouri: $42,200 for a house worth $165,900