According to a recent survey conducted by the National Association of Realtors (NAR), over 75 percent of respondents believe homeownership is a significant part of their American dream. The survey also highlighted that one of the most common inhibitors to making this dream a reality was affordability, as many don’t think their incomes will cover their mortgage payments—but you don’t actually need to be making the big bucks to buy a home these days!
In fact, making the big investment to buy a home is more financially sound than renting in many of today’s housing markets. If you’re a renter considering buying a home, there is a wide variety of mortgage programs to help you financially transition into homeownership. An FHA loan, for example, provides low-down payment options to average and low-income families. Likewise, the VA home loan provides U.S. military veterans and active-duty personnel with the ability to purchase a home with a no down payment plan and no charge for private mortgage insurance. You can find more of these mortgage options here.
Though home prices are steadily increasing, incomes are increasing as well. Coupled with decreased mortgage rates, the current housing market is more affordable. Broken down regionally, the following numbers demonstrate the estimated annual incomes necessary to purchase a home:
- Northeast: $46,454 annually to buy the median-priced home
- Midwest: $33,108 annually to buy the median-priced home
- South: $38,438 annually to buy the median-priced home
- West: $63,766 annually to buy the median-priced home
Do these numbers still worry you? The NAR study is actually a bit conservative, so even if you make less, you could still qualify to buy a home in your area. The study uses a high interest rate and assumes that only 25% of a family’s income goes towards paying the mortgage, which is impractical in many markets. Though the housing market may be daunting, things are looking up for potential homebuyers in 2017.
For more information about housing affordability, or to learn more about home financing options, contact one of our mortgage specialists today.