In some cities in America, one needs to earn well above the United States' median income to afford a decent home. A recent study released by mortgage information resource website HSH.com stated that the average American needs to make over $51,000 a year to afford an average home in the U.S.
The projected amount would reportedly cover a person's interest payments, taxes, insurance and principal amortization. The study had emphasized that the figures are for a buyer with an assumed excellent credit history, obtained a mortgage interest rate of about 4 percent, placed a down payment of 20 percent and spends a maximum of 28 percent of income on interest and principal.
Buyers in the San Francisco area need to have nearly $148,000 to afford an average home in their area. Meanwhile, residents of the New York area need to make roughly $86,700 compared to those in the San Francisco and San Diego areas, Market Watch reported.
Keith Gumbinger, vice president of HSH.com noted that there was a good reason why the New York figure sounded low. This study examined the prices in metro areas which mean that the prices of Manhattan and portions of Brooklyn were pulled down by prices in other boroughs and in the suburbs.
On the flip side, residents of the Cleveland, Pittsburgh, Cincinnati, Detroit, Atlanta and St. Louis areas do not need to make over $40,000 a year to afford the average home in their areas. This survey though assumed a 20 percent down payment. For those with salaries within the vicinity of $40,000 to $50,000, it would be difficult to save up for that, HSH reported.
Reportedly, people would end up getting funds for a down payment from family or friends. A survey by loan Depot revealed that nearly one out of five parents plans to help children between the ages of 18 and 35 purchases a home within the next five years.
