It’s always a question asked by first time home buyers (and some second time too): how much home can I afford? A huge part of the answer to that question is your income.
A better question might be, “How much house you SHOULD buy should be based on your income?” Not only because you need to make payments, but also because you need to save a down payment. Zero down payment mortgages are few and far between.
Experts recommend 20%
This will give you the best chance to get the contract, get the mortgage and avoid mortgage insurance. This is problematic for many home buyers under the age of 35. They average about 8%, according to the National Association of Realtors.
Keep in mind that if you put a 10% down payment you’ll need a higher income level. This is because you’ll have to pay mortgage insurance with your mortgage payment. Higher income means no mortgage insurance, and it also means better means to save. But what if you don’t have a higher income?
It may mean moving to an area where you can afford it.
Denver area median salary may do it
If you crunch the numbers for the Denver area, your median salary may just be enough. If you’re wondering what median income means, it’s the middle of a set of numbers.
So, if a job has a salary range of $50,000 to $75,000, the median salary is $62,500. Back to the Denver numbers. Here’s how it works out. The median salary in Denver is $69,754. The median home price is $318,164. That means if you have the 20% down payment your income should be $44,071, and if you have only a 10% down payment you’ll need an income of $52,766.
Those numbers were found on Huffington Post
and it has other cities listed as well. Do your homework!